Binance Steps Up With Stricter KYC Compliance Checks

Binance cryptocurrency exchange KYC compliance know your customer

The world’s largest cryptocurrency exchange has introduced more stringent compliance and data protection measures, in a move that could further drive up standards within the cryptocurrency sector.

Binance, the world’s largest exchange by volume, has partnered with blockchain security firm IdentityMind in a deal that seeks to “improve existing data protection and compliance measures” at the exchange.

IdentityMind provides KYC, or “know-your-customer,” and anti-money laundering checks for cryptocurrency exchange operators to ensure legal compliance and prevent fraudulent activity.

Their application validates KYC documentation in real time, working with exchanges to help with onboarding, case management and monitoring transactions.

The news marks a change in direction from Binance toward higher standards, with the exchange previously choosing not to follow the path set out by other leading exchanges like Coinbase in embracing this level of compliance.

With many jurisdictions still largely unregulated, KYC and anti-money laundering processes are often not mandated by law, with exchanges free to determine their own onboarding mechanisms.

The choice from Binance to adopt these higher thresholds is a voluntary move toward embracing a more robust approach to compliance and KYC processes, which is expected to influence other firms in shaping their approach.

Garrett Gafke, CEO and president of IdentityMind, said the firm’s patented technologies were equipped to handle the scale of transactions at an exchange the size of Binance.

“Our risk and compliance platform powered by a patented digital identities engine meet the scale demands of Binance’s global operations while providing a highly accurate system for assessing any global risk factors from outside entities for transactions.”

Binance was slammed last year for its approach to KYC and AML regulations, with Bloomberg describing the onboarding process at the exchange as “the industry’s least rigorous.”

Users were previously able to open an account and begin trading with little more than an email address, which Bloomberg suggested made the exchange vulnerable to money laundering and market manipulation.

The latest announcement is the most recent step from Binance toward greater scrutiny. It follows from a partnership announced back in October with blockchain analysis firm Chainalysis, which monitors crypto transactions for signs of illegal or illegitimate trading.