International consultancy firm Forensic Risk Alliance (FRA) is set to closely monitor all compliance activities of cryptocurrency exchange Binance for the next three years. This move follows Binance’s plea deal in November 2023, where it admitted guilt to money laundering and other federal charges and received a hefty $4.3 billion fine.

Appointment by the DOJ

The United States Department of Justice (DOJ) reportedly appointed FRA to ensure Binance adheres to regulatory requirements during this period. As part of the monitoring process, FRA will have access to internal records, premises, and employees, providing regular updates to the DOJ.

While law firm Sullivan & Cromwell was initially considered for the oversight role, concerns arose due to its prior involvement with rival crypto exchange FTX before its bankruptcy. Allegations of fraudulent conduct led the DOJ to opt for FRA instead.

Potential Future Role

Despite missing out on the current monitoring role, there are expectations that Sullivan & Cromwell might secure a separate five-year monitoring position for Binance, representing the Treasury Department’s Financial Crimes Enforcement Network.

This appointment follows the sentencing of Binance’s former CEO Changpeng “CZ” Zhao to four months in prison for failing to maintain an effective Anti-Money Laundering program at the exchange. Although prosecutors sought a longer term, the judge settled on a shorter sentence, citing a lack of evidence linking Zhao directly to specific illegal activities at Binance.

In the wake of increased regulatory scrutiny, Binance faces a pivotal period where adherence to compliance measures will be closely monitored.