India’s Financial Intelligence Unit (FIU) has imposed a fine of 188.2 million rupees ($2.25 million) on cryptocurrency exchange Binance for violating the nation’s Anti-Money Laundering (AML) rules by providing services to Indian clients. The penalty was announced on June 19 and is a result of multiple violations of the Prevention of Money Laundering Act (PMLA) from 2002.
Binance operates as a Virtual Digital Asset Service Provider and is considered a reporting entity (RE) under Section 2 (as) (vi) of the PMLA. This designation requires the company to maintain and report transaction records and implement strong AML measures. However, the FIU’s investigation found that Binance did not fulfill these obligations when serving Indian clients. In January 2024, Indian authorities issued show-cause notices to Binance and other offshore cryptocurrency exchanges, banning them from operating in India due to illegal activities.
In May, Binance and KuCoin became the first offshore crypto-related entities to receive approval from the Financial Intelligence Unit. However, this approval was conditional on paying a penalty after a hearing with the FIU. The recent announcement by the FIU states that the charges against Binance have been substantiated based on the available evidence, including the director’s written and oral submissions. Binance is currently reviewing the FIU’s order but has expressed a commitment to continue operating in the Indian market.
The FIU’s fine on Binance is a result of various violations, including the failure to maintain and report transaction records, not providing required information to authorities, and not preserving mandated records.
This is not the first regulatory fine imposed on Binance by a foreign country. In May, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced a $4.4 million administrative monetary penalty on Binance for failing to register and report large transactions in digital assets. Binance was accused of not registering as a foreign money services business and not reporting digital currency transactions exceeding $10,000. However, Binance has appealed against the director of FINTRAC, denying allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.
Earlier this year, two Binance executives were detained by Nigerian authorities over allegations of tax evasion and money laundering. The company has faced regulatory challenges in various countries, highlighting the increasing scrutiny on cryptocurrency exchanges worldwide.