Binance Dealt Another Blow: India’s Financial Watchdog Imposes $2.2M Fine For AML Violations

India’s Financial Intelligence Unit (FIU) has imposed a $2.2 million fine against Binance — the world’s largest cryptocurrency exchange by trading volume — for running afoul of the country’s anti-money laundering rules.

Binance Fined By India

Binance has been slapped with a $2.2 million (18.82 crore INR) fine for offering services to Indian customers without adhering to the nation’s anti-money laundering (AML) rules, according to a June 20 announcement.

In particular, the Financial Intelligence Unit found that Binance did not adhere to multiple Prevention of Money Laundering Act (PMLA) regulations, including reporting transaction records, complying with reporting requirements for suspicious activities, and enforcing robust measures to deter money laundering.

As a Virtual Digital Asset Service Provider, Binance qualifies as a reporting entity (RE) under Section 2 (as) (vi) of the PMLA, which necessitates the keeping and reporting of transaction records and the implementation of strict AML measures.

Since Binance reportedly failed to meet these requirements, Indian authorities issued show-cause notices to the firm and several other offshore cryptocurrency exchanges in January of this year, causing them to exit the Indian market for “operating illegally”. 

But last month, Binance became the first overseas crypto-focused entity, along with KuCoin, to secure conditional approval from India’s FIU. This approval was granted on the condition that Binance would agree to pay a fine after a hearing with the financial agency.

Global Regulatory Woes

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced in May that it was fining Binance $4.4 million for failing to register and report huge cryptocurrency transactions. The regulator claimed that Binance failed to register as a foreign money services business and report digital asset transactions surpassing $10,000.

However, the global cryptocurrency exchange has contested the administrative monetary penalty and allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.

Meanwhile, Binance’s American subsidiary, Binance.US, is facing growing regulatory scrutiny from state authorities in the United States. Multiple states, including North Dakota, North Carolina, Alaska, Florida, Maine, and Oregon, have either canceled or refused to renew the exchange’s money transmitter licenses. This threatens to fumble Binance.US’s standing in the lucrative US market and paints a gloomy picture for the exchange’s future.