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

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

CNBC confirmed the information by reviewing hundreds of messages posted on a Discord server and a Telegram group controlled and operated by Binance, which apparently ran from 2021 to March 2023.

Crypto is banned in China, but Binance employees and volunteers tell people how to bypass the ban https://t.co/ddssYTwimH

— CNBC (@CNBC) March 24, 2023

KYC? What KYC?

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

The employees even showed techniques for falsifying their country of residence to obtain Binance debit cards.

“A person using the handle Yaya and identifying as a Binance employee told them to activate their VPN and register as a Taiwanese resident, then switch their nationality back to China. The employee also suggested avoiding using VPN nodes in the United States, 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 “the techniques shared with and among customers also call into question the effectiveness of Binance’s anti-money-laundering efforts,” casting doubt on the exchange’s ability to ensure that its clients are not engaged in illegal money laundering or terrorism financing activities.

Likewise, several regulation experts, such as Sultan Meghji, professor and former Chief Innovation Officer at FDIC, expressed their concerns about Binance’s ability to comply with KYC and AML regulations. They indicated that such reports raise regulatory concerns about the platform, as it could be allowing transactions from terrorists or criminals from North Korea or Russia.

“If I had 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 think explicitly about the national security implications of how terrorists, criminals, money launderers, cyber people in North Korea, Russian oligarchs, etc., could use this to get access to this infrastructure.”

For his part, Jim Richards, Wells Fargo anti-money-laundering executive, emphasized that “the techniques for bypassing Binance’s KYC controls could have implications beyond China,” precisely because the exchange could be silently supporting 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, making forbidden recommendations and going against its rules. Employees who violate these policies face audits and may be immediately fired.

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