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In the new edition of Following the Rules, a blog series dedicated to Binance's compliance program, we highlight our corporate compliance team.
Binance Corporate Compliance covers a wide range of disciplines, including regulatory testing and audit management, product compliance, third-party due diligence, monitoring and testing, risk assessment and governance, policy, and learning and development.
The Corporate Compliance team helps ensure that Binance complies with legal and regulatory requirements across all aspects of its operations, maintains robust compliance controls, and continually improves its processes to remain at the forefront of the industry.
Binance is a massive global organization that employs thousands of people and serves users in many jurisdictions that have various regulatory requirements for activities related to digital assets. To responsibly promote the freedom of money around the world and ensure the security of our customers, we must make sure that all of Binance's internal systems and business processes are designed and executed in a manner that complies with all applicable rules and regulations. Considering Binance's size and geographic diversity, as well as the constantly evolving cryptocurrency and regulatory landscape, there is a team that addresses all pillars of the compliance program to design risk-based approaches and drive transparency. This is a truly colossal task. The driving force behind this essential work is our Corporate Compliance team.
The scope of the team's functions includes regulatory testing and audit management, product compliance, third-party due diligence, quality assurance, compliance risk management and risk governance, policy and program, and learning and development. Within Corporate Compliance, there are specialized teams to deal with these lines of work.
For example, the Policy and Programs team maintains and regularly updates anti-money laundering and sanctions programs that apply to Binance's global products and services. The Product Compliance team works closely with the product and technology teams to ensure that risk-based AML/Sanctions controls are built into each of the company's products and services. Whatever the specific focus, each of these teams is working to ensure that appropriate compliance measures are present at all levels of the organization. Leading our Corporate Compliance team is Kristen Hecht, Binance's newly appointed Deputy Chief Compliance Officer and Global Anti-Money Laundering Reporting Director.
Binance's Compliance Approach
At the heart of Binance's corporate compliance program is a risk-based approach that drives and shapes our commitment to user protection and top-down compliance culture and strategy. This approach begins with carefully identifying key areas of compliance risk management for Binance, the industry, and the global regulatory environment. Based on this, our compliance team developed a six-step process to identify the organization's key risk exposures, as well as a structured methodology for identifying, assessing, mitigating, and continuously monitoring risks. Our Corporate Compliance team then puts this methodology into practice.
Appropriate risk governance and leadership also play an essential role in effectively managing compliance risk at Binance. There are evolving internal compliance risk control advisory bodies within the organization that are tasked with compliance risk management and oversight responsibilities in accordance with global and local compliance requirements.
Additionally, for all regulated entities that report directly to a local Board of Directors and its respective subcommittees, there is enhanced risk and compliance governance to ensure regulatory requirements are met. This structure ensures the right level of focus and emphasis on regulatory compliance and promotes efficient decision-making by the leadership team.
Implementing the compliance risk management program at Binance relies on close collaboration across multiple teams, accountability, and ownership. Regional teams and business units feel empowered to identify and escalate issues using the risk processes and frameworks in place, which complements our top-down approach with an important bottom-up feedback component.
Testing compliance controls across the enterprise
An organization of Binance's scale consists of multiple business processes that flow within and between its units and divisions, and controls are in place to ensure that each of these processes is executed in accordance with all applicable rules, policies and regulations. The job of the Quality Assurance (QA) team within the Corporate Compliance department is to perform QA testing of these business processes and align them with Binance policies and local regulatory requirements. The purpose of the QA framework is to periodically evaluate the quality and effectiveness of controls, as well as identify deficiencies and problems.
The QA team monitors and tests compliance controls by case sampling, checking them against the predefined test script derived from relevant policies and procedures documents. Any errors and problems identified during these reviews are communicated to interested parties and teams responsible for correcting them, and the results of these reviews are reported to the company's management.
Through consistent and regular reviews, Corporate Compliance Quality Assurance promotes a culture of continuous improvement and helps ensure that compliance controls are robust at different levels within the organization.
Handling regulatory testing and audits
Binance regularly undergoes external regulatory testing and audits. Preparation is a collaborative process involving stakeholders from the broader Compliance, Internal Audit and Review, Operations, and Legal team, among others. The overall objective is to ensure that Binance's policies, procedures and operations meet regulatory and legal requirements in the many jurisdictions around the world where we operate.
As the global regulatory environment and associated compliance requirements are still evolving and not yet fully formed, we work hard to ensure we understand the changing landscape and continue to operate in a compliant manner.
In each jurisdiction, Compliance, Legal and Operations work closely with local experts to ensure compliance requirements are followed and applied to the services we provide. When it comes time for a regulatory test and audit, whether regular or one-off, the Corporate Compliance team collaborates with relevant local teams to provide all necessary support. Many team members are former regulators and examiners and can therefore help significantly.
For regulated entities, the testing and auditing process is conducted and managed by local managers and the final decision-making lies with the Board of Directors and Senior Management (including compliance and risk) located in the corresponding country. Corporate Compliance exists as a shared resource to assist and support local teams through the testing and auditing process.
Compliance training for Binance employees
The main objective of our Compliance Program is to ensure that every Binance employee is sufficiently aware of compliance requirements and understands the importance of a strong company-wide compliance culture, which underpins our commitment to protecting our users. We require every employee to undergo regular compliance training. Through these mandatory training programs, the Compliance Learning and Development Team promotes a culture of compliance within the organization and ensures that all employees understand and comply with legal and regulatory requirements.
Every Binance employee must undergo a series of global compliance training modules that cover essential topics such as anti-money laundering and terrorist financing, sanctions compliance, anti-bribery and corruption, market abuse prevention, and trading policies of employees. These trainings include assessments that each employee must successfully complete within a limited period of time.
In addition to mandatory training, the compliance training team identifies Binance's specific compliance training needs using a variety of methodologies, including surveys, interviews, knowledge assessments, as well as monitoring relevant regulatory developments. Based on the training needs assessment, the team creates e-learning training programs that meet up-to-date regulatory requirements, industry best practices, and organization policies. The team also develops tailored advanced training programs for the leadership team focusing on the duties and compliance obligations a leader must understand.
Binance also encourages and sponsors employees to obtain globally recognized accreditations through professional organizations such as the Association of Certified Anti-Money Laundering Specialists (ACAMS) and the Association of Certified Sanctions Specialists (ACSS).
The overall effectiveness of training programs is assessed by collecting feedback from participants and conducting assessments to measure knowledge retention and application. The results will be used to identify any gaps or areas of improvement for necessary revisions to training materials or delivery methods.
Final considerations
The Binance Corporate Compliance team plays a key role in maintaining the integrity and security of the organization by ensuring adherence to applicable rules and regulations. The constantly evolving regulatory landscape for digital assets demands a comprehensive and proactive approach to compliance. By focusing on the key areas detailed above, the Corporate Compliance team delivers on our commitment to protecting users in accordance with global regulatory standards.
Further reading
By the Rules: The Current Cryptocurrency Compliance Landscape
By the Rules: An Overview of the Binance Compliance Program
Binance Compliance Team Knowledge
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