Binance Slapped with $2.25M Fine by India’s Financial Watchdog for AML Violations

India’s Financial Intelligence Unit (FIU) has imposed a fine of 188.2 million rupees ($2.25 million) on cryptocurrency exchange Binance for providing services to Indian clients without adhering to the nation’s Anti-Money Laundering (AML) rules. The penalty, announced on June 19, stems from multiple violations of the Prevention of Money Laundering Act (PMLA) of 2002.

Binance, operating as a Virtual Digital Asset Service Provider, is classified as a reporting entity under Section 2 (as) (vi) of the PMLA. This classification mandates the maintenance and reporting of transaction records and the implementation of robust AML measures. However, an FIU investigation revealed that Binance failed to meet these obligations when serving Indian clients.

Source: FIU

In January 2024, Indian authorities issued show-cause notices to Binance and several other offshore cryptocurrency exchanges, banning them from operating in India for “operating illegally.” By May, Binance and KuCoin became the first offshore crypto entities approved by the FIU, conditional on paying penalties after a hearing with the agency.

Despite the approval, the FIU’s announcement confirmed that the charges against Binance were substantiated based on available records and submissions from Binance’s director. The violations included failing to maintain and report transaction records, not providing required information to authorities, and not preserving records as mandated by law.

This fine adds to Binance’s regulatory challenges globally. In May, Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) imposed a $4.4 million fine on Binance for failing to register and report large digital asset transactions. The Canadian regulator found that Binance did not register as a foreign money services business and failed to report digital currency transactions exceeding $10,000. Binance has appealed against FINTRAC’s allegations of noncompliance with AML and Countering the Financing of Terrorism regulations.

In February, Nigerian authorities detained two Binance executives on allegations of tax evasion and money laundering, further highlighting the exchange’s ongoing legal and regulatory issues.

As Binance faces increasing scrutiny from financial regulators worldwide, these fines and legal challenges underscore the growing need for cryptocurrency exchanges to comply with international AML and financial regulations to ensure their continued operation in global markets.