Author: Fintax

News Overview

In late August 2025, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced that it had ordered Binance Australia to appoint an external auditor to review its anti-money laundering (AML) program. AUSTRAC stated that this decision was made after serious issues were discovered in Binance's AML and counter-terrorism financing controls. The regulatory body also expressed concerns about Binance's high employee turnover, lack of local resources, and insufficient oversight from senior management—raising questions about whether Binance's governance of AML and counter-terrorism financing is adequate. Binance Australia has 28 days to nominate an external auditor for AUSTRAC's review and selection.

Matt Poblocki, General Manager of Binance Australia and New Zealand, stated that Binance acknowledges AUSTRAC's decision and added that this move "is one of their regulatory review measures, not an enforcement action." AUSTRAC CEO Brendan Thomas pointed out that the 2024 National Risk Assessment emphasizes that crypto assets are increasingly susceptible to abuse by criminals, and the action against Binance is a result of participating in the regulation of key industries, "This is a global company operating across borders in a high-risk environment. We expect it to conduct rigorous customer identification, due diligence, and effective transaction monitoring," and "All crypto operators need to ensure they comply with Australian laws and mitigate related crime risks."

FinTax Commentary

In Australia, entities providing crypto services must register with AUSTRAC as reporting entities and comply with Australian AML and counter-terrorism financing (AML/CTF) laws. A crucial aspect of AML/CTF compliance is ensuring that a business's AML/CTF program (mainly policies and procedures) undergoes independent review. The independent review report must clarify how the business fulfills its AML/CTF obligations, including management oversight procedures, business money laundering and terrorism financing risk assessments, record-keeping procedures, AUSTRAC reporting obligations, and ongoing customer due diligence, among other aspects, and it needs to assess whether the AML/CTF program is effectively implemented. The Australian AML/CTF regulatory framework is primarily based on the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and its amendments, which stipulate that relevant entities should conduct independent reviews "regularly," taking into account the nature and scale of the business, the complexity of the services provided, and the level of money laundering and terrorism financing risks faced by the business.

According to AUSTRAC's public press release, Binance was required to undergo an external audit due to concerns about the adequacy of its AML and counter-terrorism financing controls. These concerns stem from multiple factors, including Binance's high employee turnover, lack of local resources and senior management oversight, and the limited scope of Binance's latest independent review relative to its size, business, and risk assessment, among others. These issues collectively led to compliance deficiencies in Binance Australia's fulfillment of its AML/CTF obligations.

Since the beginning of this year, AUSTRAC has been strengthening its control over cryptocurrency exchanges and has taken a series of regulatory or enforcement actions against entities suspected of failing to comply with certain requirements. In May, AUSTRAC fined the Melbourne-based exchange Cointree $75,120 for delaying the submission of suspicious matter reports related to potential money laundering, which hindered timely law enforcement actions. Previously, AUSTRAC had also taken regulatory actions against 13 remittance service providers and cryptocurrency exchanges, while issuing compliance warnings to over 50 entities. Additionally, regarding the latest policies, the most recent amendment to the Australian Anti-Money Laundering and Counter-Terrorism Financing Act 2006 was passed by Parliament in November 2024, with major compliance obligations set to take effect on March 31 or July 1, 2026 (depending on the applicable subjects). The updated legislation aims to align Australia's anti-money laundering and counter-terrorism financing measures with the global standards set by the Financial Action Task Force (FATF) and correspondingly expands AUSTRAC's investigation and enforcement powers. At the same time, the regulatory scope of the legislation has also expanded to cover more crypto asset-related services to address the specific risks of the industry. Starting in March 2026, AUSTRAC will require crypto businesses to obtain user data and report financial transaction information. In July 2025, AUSTRAC also released its regulatory priorities for 2025-2026, emphasizing that "this year marks a shift in regulatory approach—from primarily compliance-focused regulation to a focus on substantive risks and harms," with a particular focus on the high-risk area of the crypto industry.

The anti-money laundering audit order issued by AUSTRAC to Binance Australia in this context is one of the latest measures implemented to curb illegal financial activities in crypto and reflects the tightening reality of global government regulation of cryptocurrency exchanges. In fact, as governments around the world increase their regulatory efforts, the crypto industry’s understanding of compliance is also changing, with compliance work increasingly seen as an intrinsic competitive point for many crypto businesses, and audit compliance being one important aspect of this.

From the incident of Binance Australia's anti-money laundering audit, relevant crypto businesses may want to pay more attention to the following two aspects in the future: first, localized governance. As AUSTRAC CEO Thomas stated in a related statement: "Large global operators may seem resource-rich and able to comply with complex regulatory requirements, but if they do not understand the local money laundering and terrorism financing risks, they cannot fulfill their obligations to conduct such activities in Australia." Although Binance has regulatory approvals or licenses in about 20 jurisdictions, these licenses are not uniformly maintained across all jurisdictions, so it must adjust according to the regulatory requirements of each country. Regulators will favor crypto businesses with strong local teams and abundant local resources, as these businesses will have a better understanding of local market risks and regulatory requirements, which is crucial for achieving compliance. Second, audit compliance. AUSTRAC requires Binance Australia's auditors to strengthen audits, and regulators in other countries may also introduce similar regulations, making "external audit orders" a routine regulatory tool in the crypto field to ensure that crypto businesses genuinely assume their corresponding audit compliance responsibilities. From another perspective, focusing on audit compliance is not just to avoid penalties but to establish a sustainable business model and enhance the ability to respond to regulatory challenges.

Looking globally from Australia, countries are striving to build a comprehensive and effective crypto regulatory system, accompanied by ongoing regulatory uncertainties. Some of these uncertainties have translated into compliance risks faced by participants in the crypto market.

For crypto businesses, considerations may include: (1) Improving independent review mechanisms, pre-planning response processes that trigger external audits, and maintaining relevant records. Ensure that their AML/CTF programs undergo sufficient independent review and conduct appropriate testing in key processes and control measures of the independent review, with the frequency and scope of independent reviews matching factors such as business scale and risk level to better align with actual needs; (2) Supplementing local resources and strengthening localized governance. Appropriately expand local teams, dynamically adjust corporate systems in line with regulatory guidelines and enforcement trends in each jurisdiction, and enhance consistency with local regulatory expectations. In short, the initiation of the anti-money laundering audit of Binance Australia by AUSTRAC highlights that the crypto industry still has room for improvement in focusing on audit compliance and localized governance, which is closely related to fostering trust in the crypto ecosystem and achieving sustainable innovative development.

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