India’s financial watchdog issued charges against Binance after reviewing written and oral submissions from the Binance director and available company records.
India’s Financial Intelligence Unit (FIU) has imposed a 188.2 million rupees ($2.25 million) fine on crypto exchange Binance for providing services to Indian clients without adhering to the nation’s Anti-Money Laundering (AML) rules.
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On Thursday, June 19, the agency announced that the penalty applies to multiple violations of the Prevention of Money Laundering Act (PMLA), 2002.
Background of the case
Binance operates as a Virtual Digital Asset Service Provider, which qualifies it as a reporting entity (RE) under Section 2 (as) (vi) of the PMLA. This designation requires maintaining and reporting transaction records and ensuring robust AML measures.
However, FIU’s investigation revealed that Binance failed to adhere to these obligations when providing services to Indian clients. Indian authorities issued show-cause notices to Binance and several other offshore cryptocurrency exchanges, banning them from India for “operating illegally” in January 2024.
In May, Binance became the first offshore crypto-related entity, along with KuCoin, to be approved by the Financial Intelligence Unit. The approval was conditional on paying a penalty after a hearing with the FIU.
Violations and regulatory action
However, the FIU announcement noted that, based on the material available on record, the charges against Binance were substantiated after considering the director’s written and oral submissions.
The FIU’s fine on Binance cites multiple contraventions, including failing to maintain and report transaction records, not furnishing required information to authorities and not preserving records as mandated.
Regulatory fines from other countries
In May, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced it was imposing a $4.4 million administrative monetary penalty on Binance for failing to register and report large transactions in digital assets.
According to the regulator, Binance failed to register as a foreign money services business and report digital currency transactions exceeding $10,000.
However, the cryptocurrency exchange appealed against the director of FINTRAC over allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.
In February, Nigeria authorities detained two Binance executives following allegations of tax evasion and money laundering at the company.
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