India’s Financial Intelligence Unit (FIU) has slapped a hefty fine of 188.2 million rupees ($2.25 million) on the cryptocurrency exchange Binance for offering services to Indian customers without abiding by the country’s Anti-Money Laundering (AML) regulations.
On June 19, the FIU made an official announcement, stating that the penalty was imposed due to numerous breaches of the Prevention of Money Laundering Act (PMLA) of 2002.
Case Background
Binance functions as a Virtual Digital Asset Service Provider, making it a reporting entity (RE) under Section 2 (as) (vi) of the PMLA. This designation entails the responsibility of maintaining and reporting transaction records and implementing strong AML protocols.
However, an investigation by the FIU uncovered that Binance had failed to fulfill these obligations while catering to Indian clients. In response, Indian authorities issued warnings to Binance and several other foreign cryptocurrency exchanges, prohibiting them from operating in India due to being “illegally” active in January 2024.
In May, Binance, along with KuCoin, became the first offshore entities related to crypto to receive approval from the Financial Intelligence Unit. However, this approval was contingent on Binance paying a penalty after a hearing with the FIU.
Violations and Regulatory Measures
Despite Binance’s spokesperson claiming that the company is not abandoning the Indian market, the FIU’s statement highlighted that the charges against Binance were justified after considering the director’s submissions. Binance is currently reviewing the FIU’s order.
The fine imposed on Binance by the FIU was due to several violations, such as the failure to maintain and report transaction records, not providing necessary information to authorities, and neglecting to preserve mandated records.
Regulatory Fines in Other Countries
In a separate incident, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced a $4.4 million administrative penalty on Binance for not registering and reporting large digital asset transactions.
According to FINTRAC, Binance failed to register as a foreign money services business and neglected to report digital currency transactions exceeding $10,000.
Binance has appealed against FINTRAC’s director regarding allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.
Earlier this year, Nigerian authorities detained two Binance executives over accusations of tax evasion and money laundering at the company.
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