• Thu. Jul 25th, 2024

India’s Financial Watchdog Imposes $2.25 Million Fine on Binance for AML Violations

John Wise

ByJohn Wise

Jul 8, 2024

The financial watchdog in India has decided to impose a huge fine on Binance. The Financial Intelligence Unit (FIU) has demanded that the crypto exchange pay a fine of 188.2 million rupees, or $2.25 million.

According to the FIU, Binance’s failure to adhere to the stringent Anti-Money Laundering (AML) policies applicable in the country, while catering to Indians was the reason for the penalty. 

In its announcement, the FIU said that there had been multiple violations of the Prevention of Money Laundering Act (PMLA), 2002, which led to the fine.

The Case Background

As it is operating as a Virtual Digital Asset Provider in India, Binance is a reporting entity under Section 2 of the PMLA.

This designation dictates that the crypto exchange has to adhere to strong AML measures. Moreover, Binance also needs to maintain transaction records and report them in a timely manner.

However, the FIU conducted an investigation and discovered that even though Binance was offering its services to Indian users, it did not meet the aforementioned obligations.

Show-cause notices had been issued to Binance as well as a number of other offshore crypto exchanges back in January. Indian authorities had accused these exchanges of ‘operating illegally’ in the country.  

In May, both Binance and KuCoin had become the first offshore crypto entities to receive approval from the Finanical Intelligence Unit (FIU).

However, there had been a condition of paying a penalty after a hearing with the Indian financial watchdog.

The FIU said that there had been substantial evidence against Binance, which led to the charges.

These included the oral and written submissions of the director. The fine imposed on Binance is due to multiple violations.

These include not sharing required information with the authorities, failure to maintain and report transactions and not keeping records in accordance with the laws.

International Context

Binance issue is not isolated to India. An administrative penalty was imposed on the crypto exchange by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) last month.

The $4.4 million fine was imposed due to Binance’s failure to maintain and record large digital asset transactions.

FINTRAC asserted that the exchange had not registered itself in the country as a foreign money service business.

In addition, Binance had not reported digital currency transactions valued at over $10,000. There had also been allegations of noncompliance with AML regulations, which Binance has appealed.

Nigerian authorities had also detained two executives of Binance in February over allegations of money laundering and tax evasion.

The Impact

These developments indicate that Binance is under a great deal of regulatory scrutiny all over the world.

It is evident from the increasing number of fines and penalties that regulatory bodies are making considerable effort to ensure compliance with AML policies.

Therefore, compliance with these regulations is a must for Binance to continue to operate. Plus, it also needs to maintain its integrity and reputation.

John Wise

John Wise

John Wise is a seasoned fintech analyst and writer with over a decade of experience in the field. With a Master’s degree in Computer Science from MIT, he specializes in simplifying complex financial technologies for a broad audience. At FinTech Service Reviews, John provides insightful and thorough reviews, helping readers navigate the evolving landscape of financial technology with ease.

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