Noah Perlman emphasized that building a strong compliance program at Binance involves focusing on two main aspects: technology and organizational culture.
Technology and Resources:
To ensure robust compliance, Binance has invested heavily in advanced technological solutions. This includes comprehensive transaction monitoring systems, state-of-the-art security infrastructure, risk management protocols, and a strong operational framework. Noah highlighted the importance of ensuring that these systems are fine-tuned to meet the specific needs of the company and its global operations.
“We need to ask ourselves: is our transaction monitoring program fit for purpose? Is it tuned appropriately? Are we getting the right balance between noise and actionable signals? How effective are our model validations?” Noah pointed out the difficulties of achieving these standards at scale, especially given the diverse regulatory landscapes Binance operates in. “It’s a challenge to get everything right, from KYC to both on-chain and off-chain screening, particularly considering our history—we might not always get the benefit of the doubt.”
Despite these challenges, Noah believes that Binance now has one of the best-in-class compliance programs, with stringent disclosure and reporting requirements. However, he acknowledges that no compliance program is perfect. “We can’t eradicate fraud completely, but we can certainly mitigate it. Continuous improvement is our goal.”
Culture of Compliance:
The second crucial aspect is fostering a culture of compliance within the organization. Noah noted that this is perhaps the most challenging part of his role. “How do we measure a culture of compliance? How do we ensure that compliance is integrated into every level of our operations?”
Building a culture of compliance requires a firm commitment from all levels of the company to prioritize regulatory adherence. At Binance, compliance is taken very seriously, with Noah reporting directly to the CEO and playing a significant role in company-wide meetings. This approach underscores the importance of his role and the weight the company places on compliance.
Looking Ahead: The Future of Binance’s Compliance Program
Noah Perlman envisions a future where Binance’s compliance program becomes invisible to users—a testament to its seamless integration and effectiveness. This goal reflects the balance Binance seeks between maintaining the core values of the cryptocurrency community, such as privacy and freedom, and meeting regulatory requirements.
Noah acknowledged the tension between the libertarian ethos of the crypto industry and the necessity of cooperating with global law enforcement agencies. “I understand the importance of privacy and the libertarian principles that drive the crypto community. But no one wants to be defrauded, and most people don’t want to unknowingly fund illegal activities. Cooperation with law enforcement, under proper legal procedures, is essential to protect users’ privacy and ensure their safety.”
Binance’s Efforts in Law Enforcement Cooperation
Binance has made significant strides in cooperating with law enforcement agencies globally. The company has handled nearly 174,000 requests for assistance and has conducted numerous training sessions for law enforcement, demonstrating its commitment to combating illicit activities within the crypto space.
The Case of Tigran Gambaryan
During his podcast appearances, Noah Perlman also highlighted the plight of Tigran Gambaryan, a pivotal figure in Binance’s compliance efforts who is currently detained in Nigeria under questionable charges.
Tigran, a former IRS special agent known for his work in dismantling the Silk Road dark web marketplace, has been a key player in strengthening Binance’s compliance framework. Under his leadership, Binance’s Financial Crime Compliance team has assisted in freezing and seizing over $2.2 billion in assets, including more than $285 million in cooperation with U.S. agencies.
Tigran’s situation took a drastic turn in February 2024 when he was detained by Nigerian authorities on charges of money laundering and tax evasion. Despite the lack of substantial evidence, he remains in custody, facing harsh conditions and health challenges, including contracting malaria.
Binance has been relentless in its efforts to secure Tigran’s release. Noah and the Binance team have been in constant communication with the Nigerian government, advocating for his innocence and emphasizing that he cannot be held accountable for Binance’s activities in Nigeria.
“We will not forget Tigran,” Noah stated firmly. “We will continue our efforts to bring him back to safety and his family.”
Conclusion
Noah Perlman’s journey with Binance has been marked by his efforts to build a world-class compliance program and foster a culture of compliance that aligns with the company’s user-focused mission. Despite the challenges, he remains committed to steering Binance through the complex regulatory landscape and setting new standards for the cryptocurrency industry. The ongoing situation with Tigran Gambaryan underscores the importance of these efforts and the broader implications of compliance in the global crypto market.