NYDFS Imposes $26.5 Million Fine on Paxos for Compliance Failures
New York's financial regulator has fined Paxos $26.5 million for compliance failures in its anti-money laundering programs, notably related to its past partnership with Binance. Paxos will also invest $22 million to enhance its compliance program to meet NYDFS standards.
- The investigation revealed inadequate controls to monitor illicit activity through Binance.
- Paxos failed to escalate identified red flags to senior management.
- Issues included a weak Know Your Customer (KYC) program and insufficient transaction monitoring.
Paxos stated these were historical issues resolved over two and a half years ago, claiming no impact on customer accounts or consumer harm. They affirmed no new claims exist regarding the Binance relationship or BUSD issuance.