Binance Fined $2.25 Million by India’s FIU for Anti-Money Laundering Violations

India’s Financial Intelligence Unit (FIU) has imposed a fine of Rs 18.82 crore ($2.25 million) on Binance, the world’s leading cryptocurrency exchange, for non-compliance with anti-money laundering (AML) regulations.

Penalty and Compliance Issues

India’s FIU has sanctioned Binance following an investigation that revealed the exchange’s failure to adhere to the Prevention of Money Laundering Act (PMLA) guidelines. This action stems from Binance’s registration with the FIU in May, mandated after a show-cause notice was served in December 2023. This notice targeted Binance and eight other offshore exchanges, including KuCoin, Huobi, and Kraken, for violating local regulatory norms.

FIU’s Findings and Directives

The FIU’s Director determined that Binance was operating within India without fulfilling the regulatory requirements specified under the PMLA. An extensive review of Binance’s practices highlighted significant lapses in AML compliance, leading to the hefty penalty. To resume operations in India, Binance must now follow strict guidelines outlined in Chapter IV of the PMLA of 2002 and the PMLA Maintenance of Record Rules of 2005. These regulations are vital for preventing money laundering and terrorist financing activities.

Strengthening India’s Regulatory Framework

This enforcement is part of India’s broader strategy to ensure that international crypto exchanges comply with domestic regulations. Earlier this year, the Indian government took decisive action by blocking the URLs of these exchanges and removing their apps from Google and Apple app stores. The registration of Binance and KuCoin with the FIU marks a significant step towards stringent AML compliance, aligning offshore crypto entities with Indian laws.

Global Regulatory Challenges for Binance

Binance’s regulatory troubles are not confined to India. Globally, the exchange is grappling with multiple legal and compliance issues. Earlier this year, former Binance CEO Changpeng Zhao was sentenced to four months in prison for violating US AML laws.

In Canada, Binance is appealing a $4.4 million fine for failing to register as a foreign money services business and for not reporting large virtual currency transactions. This appeal follows a substantial $4.3 billion settlement in the United States over similar violations, which forced Binance to exit the Canadian market last year.

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