FCA concerned about Binance’s backdoor re-entry into UK payments network

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U.K.’s financial markets watchdog has expressed concern over a recent move by embattled digital asset exchange Binance that has given it access to the U.K. payments network. The watchdog had booted Binance out of the country in June last year for flouting basic financial regulations, but the exchange has partnered with a payments company and regained access to sterling payments.

Binance had a rough year in 2021, to put it mildly. After years of reckless flouting of financial laws, regulators globally cracked down on the exchange. 

In the U.K., Binance had it even worse. In June, the Financial Conduct Authority (FCA) issued a consumer warning revealing that the local subsidiary of the exchange was operating illegally and was not authorized to offer any regulated services. 

While Binance tried to sugarcoat the situation by issuing press releases that claimed it was in talks with the regulator, financial services providers were quick to act, halting their relationship with the exchange. Barclays cut off ties with the exchange and halted credit/debit card payments, and soon after, Europe’s largest bank HSBC did the same. Binance suspended Euro deposits via Single Euro Payments Area (SEPA) shortly after.

It has now found a backdoor into the U.K. payments sector, partnering with London-based payments group Paysafe. Effective January 26, the partnership allows Binance users in the U.K. to make sterling deposits via the Faster Payment Service. 

As the Financial Times reports, this partnership and Binance’s re-entry into the U.K. payments network concern the FCA. While it acknowledged that it had been notified about the partnership beforehand, the watchdog said its concerns remain. However, in such matters, it has limited powers to act, and as such, it will not object to the partnership.

“Paysafe is aware of our concerns and is subject to close ongoing supervision consistent with our approach for firms of its size. We cannot comment further,” the watchdog told the Financial Times.

Binance reiterated the same message it has been issuing for several months now, claiming to be committed to compliance. 

“We take our compliance obligations very seriously and work proactively and collaboratively with regulators,” it told the outlet.

This commitment to compliance has become a rhetoric that Binance has stood by, even when regulators globally have proven that it has taken its compliance obligations lightly. Just recently, an exposé by Reuters revealed that the exchange continued to reiterate this message even as it continued to defy laws in Malta, Singapore, and dozens of other jurisdictions.

Senior officials at Binance have been enforcing this laxity in compliance for years, Reuters found. In one Telegram thread, the head of compliance Samuel Lim told the exchange’s staff that CEO and founder Changpeng Zhao “wanted no KYC and wanted users to be able to trade within 10 minutes of signing up.”

“Reduce KYC. Raise Limits. BEST COMBO,” Lim reportedly said, conveying the message he had received from the higher-ups at the exchange.

Reuters also exposed how Zhao runs Binance with an iron fist, striking fear into all his employees, so much so that even senior executives revealed they are terrified of telling him when Binance is breaking the law.

On its part, Paysafe said that before embarking on the latest partnership, it looked into Binance and was satisfied by the standards that the exchange keeps.

“We take our regulatory obligations extremely seriously and comply with the highest industry standards. We have performed thorough due diligence on Binance to ensure that they also comply with these high standards, as we do with all merchant partners,” the NYSE-listed company said in a statement to one news outlet.

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