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Binance AML KYC Verification and Tax Compliance Issues

Binance, the world’s largest cryptocurrency exchange, is now requiring users to verify their identity as enhanced security protection, but this requirement will have huge crypto tax compliance ramifications for its millions of users.

By requiring Anti-Money Laundering (AML) and Know Your Customer (KYC) verification, including users uploading government IDs in order to access its products and services, Binance is signaling all user activity will be reported to the IRS, according to crypto tax attorney Alex Kugelman.

“The requirement of AML/KYC verification basically means user information can and will be provided to U.S. authorities,” Alex said. “Binance is reporting all of this information to the government, so if you are a Binance user then you must report your activity to remain in tax compliance and avoid potential audits.”

AML is tightly linked to KYC requirements. AML, which is required for all financial institutions and businesses subject to Bank Secrecy Act regulations, broadly represents laws, regulations, and policies designed to prevent illegal money-making activities or moving illicit funds. KYC policies involve verifying customers’ identities and income sources while also monitoring their activity on a recurring basis.

Binance said these additional AML/KYC security measures “will further enhance user protection and combat financial crime.” 

Binance’s reporting of user information and activity to the IRS could trigger criminal investigations and civil audits.

“The biggest implication is that Binance will be providing trading data and wallet information that is connected to U.S. taxpayer information,” Alex said.

For missing records, accounting, or crypto tax return preparation, Kugelman Law’s crypto tax CPAs use proprietary, cutting edge software to recreate activity. The improved documentation helps resolve current questions, prepare for future ones, and has helped make us a standout firm in cryptocurrency audits.

If you are a Binance user, then you should contact Kugelman Law crypto tax attorneys and accountants today to ensure your records are up to date and you are providing timely and accurate information to the IRS.

Client Reviews
Alexander helped me break down my tax situation and used his expertise to figure out the next actionable steps, make sure that all the bases were covered (that I wasn't aware even existed), and confirm that things were done correctly. If you are confused and stuck in a difficult tax situation, Alexander will guide you forward and help you confidently resolve the issue. Henry Wang
If you are having tax trouble, Alexander is the one to help you. He was very professional, personable, and easy to reach. His explanation of the entire process is helpful for easing the stress that is associated with tax trouble. We never felt intimidated or out of the loop while working with him. The process was handled to our liking and we are satisfied with the results. Even the after care has been phenomenal! Tony W.
If anyone out there is in need of stellar legal tax assistance, look no further and contact Alexander Kugelman. He helped me tremendously with my tax situation and is always there to help when needed. If I can give Alexander more stars, I would because 5 stars is not enough! Thank you for everything, Alex!!! Flo Lauzon
Alexander has been a life saver! I got dragged into some serious IRS issues with a complicated foreign assignment component, which included divorce. Alexander has been working with me to resolve directly with the IRS. Alexander is detail oriented, responsive and I trust him to guide me. I will be using Alexander for all tax related matters from now on! He is stuck with me forever. Eve T.
Alexander helped me understand the IRS audit process and prepared my response. There were certain records that I had lost, but he suggested alternatives that the IRS accepted. Even better, he showed up at the audit for me and I never actually had to talk with the IRS. I didn't have to pay any penalties. I'd definitely recommend hiring Alexander to deal with an IRS issue. L.R.