India’s Financial Intelligence Unit (FIU) has imposed a hefty fine of 188.2 million rupees ($2.25 million) on popular cryptocurrency exchange Binance. The fine comes as a result of Binance providing services to Indian clients without adhering to the country’s Anti-Money Laundering (AML) rules.
The FIU, in its announcement on June 19th, stated that the penalty was a consequence of multiple violations of the Prevention of Money Laundering Act (PMLA) of 2002.
Binance, operating as a Virtual Digital Asset Service Provider, is classified as a reporting entity (RE) under Section 2 (as) (vi) of the PMLA. This categorization entails the responsibility of maintaining and reporting transaction records, as well as implementing robust AML measures.
However, the FIU’s investigation revealed that Binance had failed to fulfill these obligations while serving Indian clients. In response, Indian authorities issued show-cause notices to Binance and several other offshore cryptocurrency exchanges, effectively banning them from operating in India due to their illegal activities.
In May, Binance, along with KuCoin, became the first offshore crypto-related entities to receive approval from the Financial Intelligence Unit. However, this approval was conditional upon the payment of a penalty following a hearing with the FIU.
Despite the FIU’s order, Binance has stated that it is reviewing the situation and remains committed to the Indian market, according to a spokesperson from the exchange.
The FIU’s fine on Binance is a result of various infringements, including the failure to maintain and report transaction records, the failure to provide necessary information to authorities, and the failure to preserve records as required by law.
This is not the first time Binance has faced regulatory action and fines from authorities. In May, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) imposed a $4.4 million administrative monetary penalty on Binance for its failure to register and report large transactions in digital assets. The regulator found that Binance had not registered as a foreign money services business and had not reported digital currency transactions exceeding $10,000.
Binance has appealed against the director of FINTRAC, disputing allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.
In February, Nigerian authorities detained two Binance executives on charges of tax evasion and money laundering.
Despite these challenges, Binance remains a prominent player in the cryptocurrency industry, with a global presence and a wide range of services.