Regulators Force Binance to Prove It Can Clean Up Its Act

AUSTRAC, Australia’s financial crimes agency, has mandated that the local unit of global cryptocurrency exchange Binance appoint an external auditor following the identification of significant concerns regarding its anti-money laundering (AML) and counter-terrorism financing (CTF) controls [1]. This directive applies to Investbybit Pty Ltd, Binance’s Australian entity, which operates as a registered digital currency exchange under AUSTRAC regulation [2]. The company, recognized as the world’s largest centralized crypto exchange by transaction volume, holds regulatory approvals in approximately 20 jurisdictions [3].

AUSTRAC’s decision follows a review that highlighted a lack of robustness in Binance’s AML/CTF framework. Among the issues cited are a recent independent review with a scope deemed insufficient given the size and risk profile of the business, as well as concerns over high staff turnover and inadequate local oversight [1]. According to Brendan Thomas, AUSTRAC’s CEO, these shortcomings undermine the company’s ability to meet its regulatory obligations in Australia [4]. Thomas emphasized that understanding and addressing local money laundering and terrorism financing risks is essential for global operators, especially those handling large transaction volumes in high-risk sectors [2].

Binance Australia now has 28 days to submit a list of potential auditors for AUSTRAC’s consideration [3]. The regulator stressed that the audit is part of its supervisory review and not an enforcement action [4]. However, it underscores the increasing regulatory scrutiny on the crypto industry, particularly as digital currencies become more vulnerable to criminal abuse, as outlined in the AUSTRAC National Risk Assessment 2024 [2].

This marks the latest regulatory challenge for Binance in Australia. The exchange has previously faced legal actions from the Australian Securities and Investments Commission (ASIC), including a 2024 lawsuit against its derivatives unit over consumer protection issues and a 2023 investigation into alleged misclassification of retail clients [4]. Additionally, in 2023, Binance was forced to suspend its Australian dollar fiat money services when its local payment provider, Zepto, was directed to stop supporting the exchange [4]. The exchange now relies on stablecoins like USDT and peer-to-peer trading for Australian dollar withdrawals [4].

AUSTRAC has previously taken steps to tighten the regulatory environment for crypto in Australia, including imposing a $5,000 cash deposit and withdrawal limit for crypto ATMs in June 2025 and issuing warnings about the rise in scam activities associated with digital asset ATMs [2]. In the United States, Binance has already faced significant legal consequences, including a $4.3 billion settlement in 2023 for violations of AML and sanctions regulations [2].

The move reflects broader efforts by Australian regulators to enhance oversight of the rapidly evolving crypto sector and mitigate the potential for illicit financial activity. As global exchanges expand their operations, regulators emphasize the necessity for local compliance and risk management frameworks that align with national obligations [1].

Source:

[1] AUSTRAC orders audit global crypto exchange (https://www.austrac.gov.au/news-and-media/media-release/austrac-orders-audit-global-crypto-exchange)

[2] Australia Orders Binance Audit After Flagging 'Serious' (https://www.bloomberg.com/news/articles/2025-08-22/australia-orders-binance-audit-after-flagging-serious-concerns?srnd=phx-technology)

[3] Australia watchdog orders Binance unit to conduct audit (https://www.reuters.com/sustainability/boards-policy-regulation/australia-watchdog-orders-binance-unit-conduct-audit-over-money-laundering-2025-08-22/)

[4] Australian Regulator Orders Audit of Binance AML Systems (https://cointelegraph.com/news/australia-orders-external-audit-of-binance-s-local-unit-over-aml-concerns)