The New York financial regulator announced a settlement between Paxos Trust and Binance over deficiencies in anti-money laundering procedures.
Amount of Fine and Investments
Paxos Trust has agreed to pay a $26.5 million fine for failing to conduct adequate due diligence and for systemic deficiencies in its anti-money laundering program. Additionally, Paxos plans to invest an extra $22 million to improve its compliance program, according to a plan approved by the NYDFS.
Reasons for Settlement and Violations
According to NYDFS, Paxos failed to ensure mandatory regular due diligence and risk management, despite Binance issuing the BUSD stablecoin jointly with Paxos. Approximately $1.6 billion worth of virtual asset transactions processed by Binance between 2017 and 2022 were associated with addresses involved in illicit activities.
Regulatory Measures and Next Steps
NYDFS has reiterated its commitment to ensuring a fair and equitable financial system for all New Yorkers. The settlement with Paxos is part of ongoing efforts to improve compliance in the virtual assets sector.
The Paxos settlement with NYDFS highlights the importance of compliance in anti-money laundering practices within the virtual asset sector. Real measures such as fines and investments are essential for enhancing compliance.
