The Financial Intelligence Unit in India (FIU-IND), a regulatory body with the authority to enforce anti-money laundering regulations, has imposed a penalty on the world’s largest crypto exchange, Binance, with a substantial amount of Rs 18.82 crore. This action was taken after the exchange's initial registration with the FIU in May 2024, triggering a series of further scrutiny and compliance proceedings.
The fine was imposed on Binance after careful consideration of its written and oral submissions. The FIU, as a key player in the fight against money laundering activities and the financing of terrorism (AML/CFT), found the charges against Binance to be valid. The exchange was mandated to adhere to Chapter IV of the Prevention of Money Laundering Act (PMLA) 2002, in conjunction with the PMLA Maintenance of Record Rules (PMLA Rules) of 2005.
Binance was among the nine offshore crypto exchanges classified as virtual digital asset service providers that received a notice from FIU-IND on December 28, 2023. In January 2024, these entities were subsequently banned from operating in India for not registering and following anti-money laundering regulations under the PMLA 2002.
The Ministry of Electronics and Information Technology, in response to FIU's request, has blocked the URLs of such virtual digital asset service providers in India. Companies like Apple and Google have also removed such applications from their app stores. The ban has helped the country's domestic crypto exchanges, which adhered to the FIU guidelines and laws. Before blocking, Binance accounted for nearly 90 percent of the estimated $4 billion worth of cryptocurrencies held by Indians. On March 22, 2024, KuCoin also faced a similar penalty by FIU-IND, but of a lesser amount of Rs 34.5 lakhs for breaching Section 12(1) of the PMLA, 2002, read with Rule 7 of the PML Rules, 2005.
Changpeng Zhao founded Binance in 2017. In recent years, it has faced regulatory issues and penalties globally, including $4.38 million from Canada’s anti-money laundering agency in May for violating local anti-money laundering rules. The crypto exchange has also faced legal backlash in the US, where its founder and CEO, Zhao, was sentenced to four months in prison for breaking the country’s laws against money laundering.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash
