FATF hints at Binance as example of an exchange avoiding regulation

A new report by the Financial Action Task Force, or FATF, details a series of red flags that can help identify illicit activity involving cryptocurrencies.

Among them are a general set of guidelines involving exchanges in jurisdictions with weaker regulations, where Binance is seemingly singled out for often moving to avoid stronger regulatory oversight.

The report, published on Sept. 14, lists a variety of red flags for spotting money laundering or terrorism financing, grouped by categories.

In the section relating to geographical risk the report clearly states that users transacting with exchanges located in jurisdictions with low anti-money laundering regulations are a red flag.

The exchange in question is very likely to be Binance, which started in China and moved to Japan and eventually Malta.

Following February 2020 reports from Maltese authorities that the exchange was never licensed in the country, Binance became evasive as to its current jurisdiction.

Binance did not immediately reply to Cointelegraph's request for comment.

The wording of the report suggests that FATF would consider any transaction with Binance and other exchanges incorporated in countries with "Inadequate AML/CTF regulations" as a potential red flag.

Strict adherence to these rules could mean that fully regulated exchanges would be forced to ban direct transfers to any of these exchanges.

Still, worldwide jurisdictions and exchanges have been slow to adopt FATF guidelines, and individual interpretations could create loopholes for some types of exchanges.