Binance Fined $2.25M by India’s Financial Intelligence Unit for AML Violations

India’s Financial Watchdog Charges Binance

India’s Financial Intelligence Unit (FIU) has imposed a hefty fine of 188.2 million rupees ($2.25 million) on the global cryptocurrency exchange Binance. This penalty is the result of Binance providing services to Indian clients without complying with the nation's stringent Anti-Money Laundering (AML) regulations.

Background of the Case

Binance operates as a Virtual Digital Asset Service Provider (VDASP), qualifying it as a reporting entity (RE) under Section 2 (as) (vi) of the Prevention of Money Laundering Act (PMLA), 2002. This designation mandates maintaining and reporting transaction records and ensuring robust AML measures.

India’s Financial Watchdog Charges Binance

The FIU's thorough investigation revealed that Binance failed to adhere to these critical obligations while serving Indian clients. This led to Indian authorities issuing show-cause notices to Binance and several other offshore cryptocurrency exchanges, banning them from operating in India in January 2024 for "operating illegally."

Conditional Approval and Subsequent Violations

In May, Binance, along with KuCoin, became the first offshore crypto-related entities to receive conditional approval from the FIU, contingent on paying a penalty. Despite this approval, FIU found substantial evidence against Binance for continued violations of AML rules.

Details of Violations and Regulatory Actions

The FIU’s announcement highlighted that, based on the material available and the director’s written and oral submissions, the charges against Binance were well-founded. The specific contraventions included:

• Failing to maintain and report transaction records

• Not furnishing required information to authorities

• Not preserving records as mandated

India's imposition of a hefty fine on Binance underscores the nation's rigorous enforcement of Anti-Money Laundering regulations within its cryptocurrency sector. The significant penalties highlight the consequences for non-compliance, emphasizing the critical importance for global exchanges to adhere strictly to local regulatory frameworks to operate legally and sustainably in diverse international markets.

Conclusion

In conclusion, India’s Financial Intelligence Unit (FIU) has imposed a substantial fine of 188.2 million rupees ($2.25 million) on Binance for failing to comply with Anti-Money Laundering (AML) regulations while providing services to Indian clients.

This penalty reflects the FIU’s stringent enforcement of financial laws and underscores the consequences of non-compliance in the cryptocurrency sector. The regulatory actions highlight the importance for global exchanges like Binance to adhere strictly to local regulations to operate legally and maintain trust within international markets.