The U.S. Department of the Treasury published its comments on settlements with Binance and related parties in a statement on Nov. 21.
Secretary of the Treasury Janet Yellen said:
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform … Today’s historic penalties and monitorship [agreement] … mark a milestone for the virtual currency industry.”
The Treasury said that Binance violated the Bank Secrecy Act (BSA) and apparently violated multiple sanctions programs. It said that Binance failed to introduce programs to prevent and report suspicious cryptocurrency transactions related to child sexual abuse material, ransomware, money laundering, terrorism, and other criminal activity.
The Treasury specifically named Hamas, the Palestinian Islamic Jihad, Al Qaeda, and ISIS as the terrorist groups that benefited from Binance’s neglect.
It added that Binance allowed U.S. users to transact with parties in sanctioned areas including Iran, North Korea, Syria, and the Crimean region of Ukraine.
FinCEN and DOJ settlement amounts are interrelated
The Treasury and two of its subdivisions — the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) — were among several U.S. agencies that reached a resolution with Binance yesterday.
FinCEN’s settlement imposes a $3.4 billion civil penalty on Binance; the terms also require Binance to be monitored for five years, engage in compliance efforts, and exit the United States. OFAC’s settlement imposes a $968 million penalty and other compliance obligations including the aforementioned FinCEN monitorship. The Treasury described both settlements as the largest in history for each subdivision.
Binance could also be compelled to pay $150 million in additional penalties if it fails to comply with those compliance and monitorship requirements.
The Department of Justice (DOJ) separately said that Binance will pay $4.3 billion to resolve its own investigation, made up of a $2.5 billion forfeiture and a $1.8 billion criminal fine. It said that it would credit $1.8 billion toward the various Treasury settlements and toward another settlement with the CFTC worth $150 million.
The DOJ is responsible for the criminal aspects of the Binance case. Though Binance itself seemingly will not experience further prosecution, its former CEO Changpeng Zhao faces up to 18 months in prison and will be sentenced in February 2024.
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