Canada's financial watchdog has cracked down hard on the major cryptocurrency exchange Binance, imposing a staggering C$6 million ($4.38 million) penalty for violating anti-money laundering and counter-terrorist financing laws.

The Financial Transactions and Reports Analysis Centre (FINTRAC) cited Binance's failure to properly register and report thousands of large cryptocurrency transactions as the basis for the fine.

The move represents another major blow for Binance, which was forced to cease operations in Canada last year amid mounting regulatory scrutiny. According to FINTRAC, the exchange failed to report 5,902 instances of receiving virtual currency valued at C$10,000 or more between June 2021 and July 2023. Proper reporting of such large transactions is a key anti-money laundering requirement.

The penalties against Binance come just weeks after its former CEO Changpeng Zhao was sentenced to four months in prison by U.S. authorities for violations of money laundering laws. The exchange itself agreed to pay a record $4.32 billion settlement, while Zhao was personally fined $100 million.

The massive fines and criminal charges against Binance represent a pivotal moment for the crypto industry and underscore the intensifying regulatory crackdown on money laundering risks in the space. For years, crypto exchanges like Binance operated in a legal grey zone, but as the market has rapidly grown, regulators have been forcing them to implement robust anti-money laundering controls akin to traditional financial institutions.

The scale of the penalties, including the multi-billion dollar US settlement, signals that the era of a relatively lawless crypto wild west is giving way to enhanced oversight and accountability. Exchanges that fail to get their compliance house in order face devastating financial and reputational consequences.

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