The Australian Transaction Reports and Analysis Centre (AUSTRAC) has directed Binance Australia to appoint an external auditor due to serious concerns with the crypto exchange’s anti-money laundering and counter terrorism financing (AML/CTF) controls.

Investbybit Pty Ltd, Binance Global’s Australian arm, is an AUSTRAC registered digital currency exchange provider.

By transaction volume it is the world’s largest centralised crypto exchange. Established in 2017, it holds regulatory approvals or permissions in around 20 jurisdictions.

AUSTRAC CEO, Mr Brendan Thomas, said AUSTRAC’s National Risk Assessment 2024 highlights the increasing vulnerability of digital currencies to criminal abuse and the action against Binance follows regulatory engagement across the priority sector.

Mr Thomas said:

“Businesses can have systems and processes that apply to multiple jurisdictions – but they need to reflect local regulatory requirements. The systems must adapt to the regulatory requirements, not the other way around.

Understanding specific risks of criminality in the Australian context is crucial to ensure they’re meeting their reporting obligations here.”

AUSTRAC’s concerns were prompted by several issues including Binance’s latest independent review which was limited in scope relative to its size, business offerings and risks.

AUSTRAC has also flagged concerns with high staff turnover at Binance and a lack of local resourcing and senior management oversight, raising questions about the adequacy of its AML/CTF governance.

Binance Australia has 28 days to nominate external auditors for AUSTRAC’s consideration and selection.