Cryptocurrency exchange Binance announced today, March 26, that the company has partnered with IdentityMind, a risk management and regulation compliance platform, in order to help improve the exchange's approach to know-your-customer (KYC) and anti-money laundering (AML) processes. In upgrading Binance's security measures, the exchange and its new partner hope to "foster greater trust among financial institutions worldwide."
Providing its software as a service, IdentityMind helps compliance teams at cryptocurrency firms boost their risk management by providing AML solutions that use machine learning and dynamic modeling to track and snuff out suspicious user activity. Furthermore, IdentityMind's KYC compliance system allows its user to analyze digital identities to enable companies to carry out identity proofing to prevent fraud, and create reputation scores to better assess a company's exposure to risk.
Binance's announcement outlines the exchange's plan to take advantage of IdentityMind's AML and KYC systems to strengthen its compliance capabilities as the exchange grows its user base and the general growth of the crypto market continues to add new challenges.
As an exchange, Binance has spent much of 2019 offering up new services meant to act as on-ramps for those interested in joining the cryptosphere. In late January, the exchange partnered with the payments processing firm Simplex, allowing users to purchase bitcoin, Ether, Litecoin, and XRP using a Visa or Mastercard credit or debit card. More recently, Binance launched Binance Lite Australia, a cash-to-bitcoin platform that allows users to purchase bitcoins from a network of 1,300-plus newsstands around Australia. However, the partnership with IdentityMind seems to signal that the exchange is interested in both bringing in new users and better protecting them when they arrive.
In general, Binance hasn't exactly been lauded for its approach to KYC and AML services. In 2018, Bloomberg described the exchange's KYC policies as some of the least rigorous in the industry, noting that users only needed to provide an email address to open a Binance trading account. The IdentityMind partnership, however, is the most recent move in a string of collaborations seemingly meant to improve the exchange's security reputation. In October 2018, Binance partnered with Chainalysis, using the analysis firm's "Know Your Transaction" compliance software to monitor cryptocurrency transactions in real-time to push back against illicit activity. Just a month later, in November 2018, Binance began working with financial risk management firm Refinitiv to bring automated KYC solutions to the exchange.