Binance, a popular cryptocurrency exchange, is facing legal troubles in India as the Indian Financial Intelligence Unit (FIU) has imposed a hefty fine of $2.25 million (Rupees 188.2 million) on the platform for not complying with the country’s Prevention of Money Laundering Act (PMLA) of 2002.
The FIU had previously banned Binance from offering its services to Indian customers through a show cause notice, along with several other offshore exchanges catering to Indian clients. On 19 June 2024, the FIU announced that Binance, identified as a Reporting Entity (RE), failed to uphold anti-money laundering (AML) protocols while operating as a Virtual Digital Asset Service Provider (VDA SP) in India.
According to Indian laws, crypto service providers are required to adhere to strict AML regulations. However, Binance allegedly facilitated money laundering activities and neglected to submit essential transaction records to the FIU and other government bodies. It is even suggested that Binance may not have retained such records for reporting purposes, as per the charges brought against it.
Following a review of Binance’s responses and arguments, the FIU concluded that the accusations against the exchange were valid. This penalty was imposed after Binance was permitted to resume its operations in India under the condition that it engage in a hearing with the regulatory agency and face the consequences of its actions.
In addition to the fine in India, Binance is also facing potential penalties in Canada. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) fined Binance $4.4 million for failing to register as a money services business and report transactions exceeding $10,000. Binance has contested these charges and is seeking to have them dismissed.
Moving forward, the FIU has advised Binance to enhance its AML program and reporting mechanisms to align with Indian regulations while serving the country’s crypto community. It is essential for Binance to take AML-related processes seriously in India to avoid further fines and penalties in the future.
These legal challenges highlight the importance of regulatory compliance for cryptocurrency exchanges operating in different jurisdictions. As the crypto industry continues to evolve, maintaining robust AML measures and fulfilling reporting obligations are crucial for ensuring transparency and accountability in the digital asset space.