India’s Financial Intelligence Unit (FIU) has imposed a fine of INR 18.82 crore ($22,500) on cryptocurrency exchange Binance for non-compliance with the country’s anti-money laundering (AML) regulations when providing services to Indian customers. On 19th October, the institution announced that the penalty involved multiple violations of the 2002 Prevention of Money Laundering Act (PMLA).
Background of the case:
As a digital asset service provider, Binance qualifies as a Reporting Entity (RU) under Section 2 of the PMLA. This regulation requires exchanges to maintain and report transaction data and implement strict anti-money laundering measures.
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However, the investigation by the Financial Intelligence Unit revealed that Binance failed to fulfill these obligations in serving Indian customers. As a result, regulatory authorities have issued penalty notices to Binance and several other offshore cryptocurrency exchanges, prohibiting them from operating in the country from October 2024.
In May of this year, Binance and KuCoin became the first batch of offshore cryptocurrency entities conditionally approved by the Financial Intelligence Unit, with the condition that they would pay fines following the hearings.
Non-compliance and regulatory action:
The statement from the Financial Intelligence Unit confirms that the accusations against Binance are well-founded based on the written and oral statements of the board. The exchange is accused of multiple violations, including failure to maintain and report transaction data, failure to provide required information to authorities, and failure to maintain records as required.
