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Italian Regulators Block Consumers from Investing in Binance

Richard Marley
July 16, 2021
2 minutes read
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Italy has joined the list of warnings against Binance, directing citizens to avoid investing in the cryptocurrency.

In an announcement from the national securities regulator on Thursday, citizens of Italy have been blocked from accessing the world’s largest cryptocurrency exchange, Binance, on all its platforms.

The announcement made by CONSOB (Commissione Nazionale per le Società e la Borsa) made it clear that consumers are not even allowed to use Binance.com. Adding to this, CONSOB revealed that Binance is not authorized to provide its services and operate in Italy, even though parts of the website were written in Italian.

Italy’s market watchdog Consob has become the latest global regulator to issue a warning about Binance. https://t.co/CHGmQ0RhBG pic.twitter.com/Fz6CmZhTzb

— Amy Castor (@ahcastor) July 15, 2021

“It is important that savers are informed that transactions in instruments related to crypto-assets may present risks that are not immediately perceptible, due to their complexity, the high volatility of the prices of these instruments as well as for malfunctions and cyberattacks to which the IT infrastructures used for such operations may be subjected,” stated the regulator.

The new regulatory ban from Italy adds to the list of warnings that have been announced against Binance. UK’s Financial Conduct Authority (FCA) recently banned cryptocurrency trading through Binance in the country over concerns of money laundering and terrorist financing. Other countries also hold a firm stance against the volatile cryptocurrency exchange due to the high risks associated with it.

Binance also received a negative response from Thailand and Japan, while Canadian regulators in Ontario have forced the exchange to restrict its operations.

Statista survey revealed that by 2020, 48% of Italians were using cryptocurrency to make online purchases, pointing out increased adoption of digital assets in the country.

A source from Binance told Insider that the notice from CONSOB does not have a direct impact on the services provided by Binance.

The spokesperson also stated that the crypto exchange is working in collaboration with regulators to maintain compliance. “We are actively keeping abreast of changing policies, rules and laws in this new space”.

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Their comments are a response to the ongoing investigation of current and former government officials and high-profile individuals who have been exposed by the Consortium of Investigative Journalists (CIJ) for money laundering, tax evasion, and other crimes.

Instead of fixating on any salacious details, financial institutions should pay heed to the information, and the revelations “need to be taken in stride,” stated Lauren Kohr, a veteran compliance officer who now serves as senior director of AML for the Americas with the Association of Certified Anti-Money Laundering Specialists (ACAMS).

“There is a lot to consider, and we do not want to send our AML officers on an ineffective and inefficient wild goose chase for every data point leaked and how that may impact their AFC [anti-financial crime] compliance program,” Kohr added. “Given that it is so early in the leaks and assuming this will go on for days, weeks, and months, AML officers should not have a knee-jerk reaction.”

Kohr stated that financial institutions should pay heed to evaluate the effectiveness of their overall risk-based Anti-Financial Crime program, with particular focus on Enhanced Due Diligence, Customer Due Diligence, and UBO verification. She also advised financial institutions to closely monitor high-risk customers, products, services, geographies, and transactions to prevent the risk of frauds such as money laundering and terrorism financing.

To minimize scandals such as the Pandora Papers in the future, FinCEN is currently working towards the creation of a beneficial ownership registry, implementing the Corporate Transparency Act enacted along with the Anti-Money Laundering Act of 2020.

Suggested Read: Creating UBO Registry ‘Biggest Focus’ for US Treasury’s Anti-corruption Push

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Post Covid-19 Landscape of Casinos

Like other sectors, the gambling industry is also influenced by advanced technology trends and is now available on the internet. There has been a debate about regulations in the gambling industry. Experts think that the industry’s prosperity is subject to the regulations imposed on it. Recently, it has entered the class of big sectors, being called a billion-dollar industry.

The gross gambling revenue of Europe is forecasted to reach 29.3 billion in 2022. (Statista)

In 2020, online gaming witnessed a 393% increase in players, with the UK exhibiting 261.9% growth. (CNBC)

In the United Kingdom, online casinos accounted for £5.51 billion. (United Kingdom Gambling Commission)

During the fiscal period 2021-26, the online gambling market is forecasted to grow with the CAGR of 11.94%. (Mordor Intelligence)

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Without a doubt, the online casino market is thriving. Nevertheless, it is also true that most gambling companies fail in the initial two years. Although, poor management, research and planning, inadequate structure, and scanty marketing are the reasons behind this. But in modern times, online frauds and scams have become the most crucial leg-pullers for the online gambling sector.

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Multiple Accounts Scam: Biased Gameplay

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Everyone in the market knows what money laundering is and how it is done. Because of solid security measures implemented by financial institutions, money launderers have targeted other sectors, gambling being one of them.

As online casinos deal with money directly, it becomes easy for financial criminals to place, layer and extract their illegal funds.

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Chargebacks are filed by customers where they restrain the (betting) payment by contacting the bank or the card issuer claiming that their card was used without their permission. Fraudsters claim fake chargebacks as it is difficult for gambling sites to fight against friendly frauds because it can damage their relationship with the card issuer.

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Recently the UK and the US have tightened the rules for e-gambling platform providers. This is done considering the increasing cases of online scams and money laundering related activities in the gambling industry. The UK has mandated gambling sites to confirm the ID and age of the players before onboarding them.

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Facial Recognition: Matching the gambler’s live captured selfie with the photo ID

Address Verification: Extracting and validating the residential address from legitimate documents

Age Confirmation: Calculating the age by drawing out DOB from ID documents and confirming that it falls under the specified range

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Key Takeaways

Today’s tech-savvy fraudsters have found advanced ways of social engineering, making account taker over and identity theft easy. To address this dilemma, governments are planning to regulate the gambling sector. Additionally, rising AML penalties demand automated AML/KYC solutions for compliance purposes. AI-powered AML/KYC solutions that perform identity verification and AML screening in real-time can help gambling industry in combating frauds.

Want to know more about regulatory compliance of gambling sector?

Italian Regulators Block Consumers from Investing in Binance

Post Covid-19 Landscape of Casinos

Leg-pullers for Online Gambling

Multiple Accounts Scam: Biased Gameplay

Money Laundering: An Indictable Financial Crime

Chargeback Abuse: Fake Claims

Enhanced Due Diligence: A Robust Solution for Eliminating Risks

Know Your Customer

Anti Money Laundering Screening

Key Takeaways

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