Binance fined $2.25M by India’s financial intelligence unit

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India’s Financial Intelligence Unit (FIU-IND) 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 rules.

India’s Anti-Money Laundering unit announced on Thursday, June 19, 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(sa)(vi) of the PMLA. This designation requires maintaining and reporting transaction records and ensuring robust Anti-Money Laundering (AML) measures. 

However, FIU-IND’s investigation revealed that Binance failed to adhere to these obligations while providing services to Indian clients. Indian authorities issued show-cause notices to Binance and several other offshore cryptocurrency exchanges and removed 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 India’s Financial Intelligence Unit (FIU). The approval was conditional on paying a penalty after a hearing with the FIU.

Order stating Binance’s fine by India’s Financial Intelligence Unit  Source: FIU-INDIA

Violations and Regulatory Action

However, the FIU announcement noted that after considering the written and oral submissions of the Binance Director, FIU-IND, based on the material available on record, it was found that the charges against Binance were substantiated. 

Related: Nigerian High Court dismisses Binance exec’s suit over detention

The FIU-IND’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 that exceeded $10,000.

However, the cryptocurrency exchange appealed against the director of FINTRAC over allegations of noncompliance with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations.

In February, Nigeria authorities detained two Binance executives following allegations of tax evasion and money laundering at the company.

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