The founder of the largest cryptocurrency exchange, Binance, was sentenced to four months in prison for violating the Bank Secrecy Act by failing to comply with anti-money-laundering laws. Changpeng Zhao, known as “CZ,” is the first person to serve prison time for similar violations of the Bank Secrecy Act.
Cryptocurrency, Anti-Money Laundering and the Bank Secrecy Act
The Bank Secrecy Act (1970) requires financial institutions to implement customer due diligence to monitor customer activity. Since the Anti Money Laundering Act of 2020, cryptocurrency exchanges have been classified as money services businesses and are required to comply with the Bank Secrecy Act. Companies such as Binance are required to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The increased scrutiny on crypto businesses has been followed by a wave of high profile prosecutions, most notably FTX founder Sam Bankman Fried.
Changpeng Zhao was accused of failing to implement anti money laundering protocols and systematic checks of transactions as required by law. Prosecutors alleged that Changpeng Zhao told employees the company was pursuing a policy of “ask for forgiveness, not permission,” and that Binance wouldn’t have grown to its size by following regulations. Zhao pleaded guilty and Binance agreed to forfeit $2.51 billion and pay a fine of $1.805 billion as part of the plea agreement.
Cryptocurrency Crackdown
The anti-money laundering crackdown is gathering speed as prosecutors and lawmakers aim to crack down on transactions by criminals, international terrorist groups and foreign governments. Additional strict anti-money laundering laws have been proposed. In a letter to Congress, assistant attorney general Carlos Uriarte said that lawmakers should enact harsher penalties for violations of the Bank Secrecy Act.
If you are the subject of a coordinated investigation by the Financial Crimes Enforcement Network, or any other federal financial agency, prosecution could be swift and severe, in line with new standards. At Dhar Law, LLP, we are top rated white collar criminal defense attorneys who have established a reputation for defending complex white-collar crimes in state and federal court. If you or someone you know is under investigation for financial crimes, please don’t hesitate to contact a member of our team today for more information (617) 880-6155
