Binance Employees Trained Users to Bypass KYC and AML Rules (Report)

On March 23, CNBC reported that a group of Binance angels had shared techniques that allow users to bypass the platform’s KYC, residence, and verification systems.

CNBC Certain The information comes from a review of hundreds of messages posted on the Discord server and Telegram group controlled and operated by Binance, which appear to have ran from 2021 to March 2023.

Crypto Banned in China, But Binance Staff and Volunteers Tell People How to Get Around the Ban https://t.co/ddssYTwimH

– CNBC (CNBC) March 24, 2023

know your customer What do you know your customer?

According to CNBC, a number of Binance employees and “angels” (volunteers trained by the exchange to promote its use) have provided video guides and tutorials showing the steps for users to forge bank documents and provide fake addresses when registering on the platform.

Employees have even demonstrated techniques for faking their country of residence to obtain Binance debit cards.

“A person who uses the handle Yaya and identifies as a Binance employee told them to activate the VPN, register as a Taiwanese resident, and then switch their nationality back to China. The employee also suggested avoiding using VPN nodes in the US, Singapore, and Hong Kong.”

The report also revealed that many users in China were able to access Binance’s services despite the country’s ban on cryptocurrency exchanges since 2017 and the use of digital assets since 2021.

Binance is investigating the report

CNBC stated that “technologies shared with customers also call into question the effectiveness of Binance’s anti-money laundering efforts,” which casts doubt on the exchange’s ability to ensure that its customers are not involved in illicit money laundering or terrorist financing activities.

Similarly, several regulatory experts such as Sultan Maggi, a professor and former head of innovation at the FDIC, have expressed concerns about Binance’s ability to comply with KYC and AML regulations. They noted that such reports raise regulatory concerns about the platform, as it may be allowing transactions from terrorists or criminals from North Korea or Russia.

“If I have an eight out of 10 concern about Binance from a regulatory perspective and from a national security perspective, this takes it to a 10 out of 10 (…) I’m thinking explicitly about the national security ramifications of how terrorists, criminals, money launderers and cyber people can operate in North Korea.” And Russian oligarchs, etc., use this to gain access to this infrastructure.”

Jim Richards, executive director of anti-money laundering at Wells Fargo, confirmed that “the techniques to bypass Binance’s ‘know your customer’ controls could have implications outside of China, precisely because the exchange could silently support operations from other sanctioned countries.” .

According to a Binance spokesperson, the exchange has already taken action against employees who may have violated the company’s internal policies, made prohibited recommendations and violated its rules. Employees who violate these policies face audits and may be fired immediately.