Binance Exchange Integrates CipherTrace Traveler, Committing to Global Standards in Crime Prevention

Binance integrates CipherTrace Traveler to help Virtual Asset Services Providers comply with global ‘Travel Rule’ regulations.

By
Chung Yee
on
July 4, 2021
Category:
BSC News

Meeting Global Compliance Standards

Binance is now among the first few exchanges to integrate the CipherTrace Traveler to meet the ‘travel rule’ regulation from the United States Treasury. The rule, enacted as the Bank Secrecy Act of 1997, applies to information exchanged when two financial institutions during transmittals.  As part of the compliance framework by the Financial Crimes Enforcement Network (FinCEN) and the Financial Action Task Force’s regulations, all cryptocurrency exchanges, custody providers, OTC trading desks, banks, and other financial institutions must comply. On June 30, Binance announced the partnership with CipherTrace to meet regulations standards.


Source: Travel Rule mandates that certain information relating to the transmitter and recipient is kept to preserve the information trail

Compliance with the travel rule plays an essential part in enforcing financial laws and assisting law enforcement in detecting financial crimes. Relevant agencies can detect, investigate and prosecute money laundering and other financial crimes by following information trails. According to the law, not all fund transmittals are subject to this surveillance. Only transmittals exceeding $3000 will see the information of the persons sending and receiving funds recorded. In the case of crypto, it will be the individual crypto address. 

CiperTrace employs what they call a “Traveler” commercial solution for compliance to the ‘travel rule’ requirement. For crypto and blockchain projects, the key to compliance with the Travel Rule lies in a commitment to the Know Your Customer (KYC) and continuing to gather the required information at customer on-boarding. This move reinforces Binance’s stance in committing to meeting regulatory standards globally. 

Affirmation to this commitment came from Samuel Lim, Binance’s Chief Compliance Officer who was quoted in the Binance blog saying, ‘We are continuing to invest in our compliance program and technology to further strengthen our standards.’

Compliance Comes with a Price Tag

The travel rule requires a system that automatically captures the information that must be preserved for investigation should the need arise. Licensed institutions must allocate resources to cope with the regulatory rigors; as the largest center of liquidity, Binance is prepared to put aside a portion of expenditure to meet the regulatory obligation. Facing regulation requires capital investment.

Source

There is a need for reliable technology from a partner capable of meeting such regulatory rigors. Binance has billions of dollars worth of transactions each day designed to flow autonomously and seamlessly. In the entire process of ensuring efficiency, speed, and costs, Binance has to ensure compliance is not neglected. The partnership with CipherTrace is a necessary expenditure for Binance to comply with the travel rule properly. 

How CipherTrace Works

The services by CipherTrace ensure that Anti Money Laundering (AML) standards are met without compromising security and operational continuity. The Virtual Asset Provider (VASP) automatically identifies the addresses associated with the transactions for the user. The solution securely verifies the originating VASP and the recipient VASP. The integrity of the entire process hinges on data security wherein data leakage and breach of confidentiality is a major concern. 

The CEO of CipherTrace told the Binance blog that their product can “meet the highest standards for global Anti-Money Laundering compliance,” especially as regulation “tightens in jurisdictions around the world.” 

At the moment, CipherTrace only applies the travel rule requirement during an automated process for jurisdictions that mandate it. But it can also include other jurisdictions in the future by automating the onboarding and validation of a new counterparty. 

Traveler is a compliance solution program that performs counterparty VASP due diligence according to standards prescribed by Financial Action Task Force (FATF). It also issues digital certificates in the form of Know Your VASP (KYV) to a counterparty that meets the due diligence process requirements. 


Creating a Balanced Platform 

Binance’s serious commitment to its regulatory obligations proves its desire to be a major player in the industry. One of the most common goals of a decentralized network is to prevent shutdowns and censorship. However, this must be balanced with a regulatory framework that can prevent users from falling victim to crimes that can proliferate in an unregulated space. It also means that bad actors will not see the crypto space as a safe haven to carry out criminal activities. 

As scrutiny around the world increases the need for compliance is necessary to continue competing with traditional finance. Binance has been meeting its expectations by ensuring that its users can trade and invest in a safe and regulated environment without worries of confidentiality, data leak, and losses. 

Source

What is CipherTrace

CipherTrace is one of the most trusted names in decentralized finance security. Founded in 2015, their team is committed to protecting consumer privacy against illicit activity and safely growing the blockchain economy. Their expertise lies in fraud protection, anti-money laundering, and financial crime prevention. With 150 consumers and 7 offices worldwide, they are a leader in cybersecurity. CipherTrace has also received funding from the Department of Homeland Security. 

For more information find CipherTrace at: Website | CipherTrace Newsletters | Twitter |

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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