Binance has announced a partnership with regulation tech company Coinfirm to ensure that it complies with the incoming regulations set out by the Financial Action Task Force (FATF). The FATF announced tough new regulations for crypto-handling institutions in June which all but stripped users of anonymity when using exchanges, and introduced a headache for institutions as they battled with the new rules and how to implement them.
Smaller Exchanges Face Even Tougher Times
Binance will integrate Coinfirm’s anti-money laundering (AML) platform into their exchange, incorporating the service’s risk score analysis, alerts, and investigations system in order to comply with the new regulations and help Binance thwart money laundering attempts. The FATF regulations mean that the identities of anyone sending or receiving more than $1,000 worth of cryptocurrency through an exchange must be verified, something that left many individuals, and institutions, scratching their heads as to how to comply. Larger exchanges like Binance and Coinbase have the finances to employ third-parties like Coinfirm to do the hard work for them, but smaller exchanges and crypto funds that have found themselves struggling for cash after the most brutal bear market in crypto history will find the cost of compliance almost ruinous.
Questions Over Data Collection
The depth of information that the FATF regulations required exchanges and funds to track and retain staggered many within the community when they were confirmed. These included:
(i) originator’s name (i.e., the sending customer);
(ii) originator’s account number where such an account is used to process the transaction (e.g., the VA wallet);
(iii) originator’s physical (geographical) address, or national identity number, or customer identification number (i.e., not a transaction number) that uniquely identifies the originator to the ordering institution, or date and place of birth;
(iv) beneficiary’s name; and
(v) beneficiary account number where such an account is used to process the transaction (e.g., the VA wallet).
With time having passed and institutions having accepted these regulations, most of them are in fact not that hard to achieve – especially the ones regarding the originating party. However, how an exchange will be able to know the name of someone who has just created a random anonymous Bitcoin account is something that cannot easily be guessed at. Coinfirm must have found a way to do this, and the results will make for very interesting viewing.