What haven’t we learned?  The Binance debacle tells us there is a long way to go.

For those of us in the financial crimes compliance profession we look at the current debacle with Binance and ask ourselves, how could this happen? We then look at our policies, procedures, and technology and think we have the best in breed, and this could not happen to us.  But it can and does when we forget that key ingredient to our internal control structure – PEOPLE.  In fact, for those of us in the US and or follow FinCEN (Financial Crimes Enforcement Network), they told us back in August 2014 when they issued Advisory
FIN-2014-A007.pdf where they state, “Shortcomings identified in recent Anti-Money Laundering (AML) enforcement actions confirm that the culture of an organization is critical to its compliance.”

FinCEN provided guidance to financial institutions in that Advisory which noted that, among other things, leadership should be engaged. OFAC (Office of Foreign Assets Control) provided guidance which articulates the need for management commitment to compliance.  Certainly, Binance management was committed, just not to compliance.  A culture of
non-compliance was promoted.  Given what we see in the enforcement orders, anyone in the position of Chief Compliance Officer at the organization should have resigned and not been party to the efforts of management to circumvent regulations.

So, what can we learn? 

• Clearly any person or entity associated with Binance needs to look at their due diligence efforts and ask what went wrong.  There was clearly too much reliance on statements provided by the company and little to no verification efforts. The bad guys will be looking for a new platform so everyone should be beware of customers coming from Binance.
• If you are a compliance professional be aware of that primary red flag, lack of a compliance culture.  There needs to be a culture of compliance not just at the top of the organization but one that permeates from the top through the entire organization.
• As a compliance professional, make sure your service providers understand your business and the compliance risks you face and how their system, when configured correctly, helps to mitigate risk.
• As a service provider to financial institutions make sure your customer is using your system correctly and not just as a “cover” for compliance.

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• Source: https://www.finextra.com/blogposting/25314/binance-debacle—what-havent-we-learned?utm_medium=rssfinextra&utm_source=finextrablogs