Binance Fined $2.25M by Indian FIU for Violations

Key takeaways:

• India’s FIU fined crypto exchange Binance $2.25 million for serving Indian customers without abiding by the country’s anti-money laundering regulations.
• According to Section 2 (sa)(vi) of the PMLA, Binance is a reporting entity (RE) since it functions as a virtual digital asset service provider.

India’s Financial Intelligence Unit (FIU) fined crypto exchange Binance 188.2 million Indian rupees ($2.25 million) for serving Indian customers without abiding by the country’s anti-money laundering regulations.

On Thursday, June 19, India’s Anti-Money Laundering agency declared that the fine applies to several infractions of the Prevention of Money Laundering Act (PMLA), 2002.

According to Section 2 (sa)(vi) of the PMLA, Binance is a reporting entity (RE) since it functions as a virtual digital asset service provider. Because of this categorization, thorough Anti-Money Laundering (AML) procedures must be followed, along with the reporting and maintenance of transaction records. 

Nevertheless, the inquiry conducted by FIU showed that Binance did not fulfill these responsibilities when offering services to Indian customers. 

In January 2024, Indian officials deported Binance and several other offshore crypto exchanges from India for “operating illegally” after sending them show-cause notices.

In May, Binance and KuCoin were the first crypto-related offshore entities to receive approval from India’s FIU. After a FIU hearing, the approval was contingent upon paying a fine.

The FIU release did, however, state that the allegations against Binance were judged to be proven after considering the written and oral representations of the Binance Director, FIU, based on the information available on record. 

The penalties imposed by the FIU on Binance list several violations, such as failing to keep and disclose transaction records, failing to provide authorities with the necessary information, and failing to preserve documents in accordance with regulations.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) (a federal agency) fined Binance $4.4 million in May for neglecting to register and disclose significant transactions involving digital assets.

The regulator claims that Binance neglected to register as a foreign money services provider and disclose any transactions using digital currency over $10,000.

On the other hand, the crypto exchange filed an appeal against the FINTRAC director due to claims that the director had violated the laws against money laundering (AML) and the financing of terrorism (CFT).

Two executives of Binance were taken into custody by Nigerian authorities in February after the company was accused of tax evasion and money laundering.