Regulation
Indian regulator fines Binance $2.25 million for AML violations
Binance, the largest cryptocurrency exchange by trading volume, has once again come under regulatory pressure after being fined by India’s regulatory watchdog, the Financial Intelligence Unit (FIU) , July 20. The exchange, which is still struggling to navigate global financial waters, was fined $2.25 million for in violation of the fight against money laundering (AML) in the country.
Crypto exchanges and other virtual exchanges digital asset Service Providers (VDASP) are required to register with the FIU before operating in the country as per Indian regulations, however, Binance failed to comply, hence the hefty fine.
A Indian crypto tax expert, CA Sonu Jain, shared the original document on X (formerly Twitter), detailing the reasons for the sanction. According to the post, the fine was imposed because Binance failed to provide the contact details of the principal officer to the FIU, there was no mechanism in place to detect suspicious transactions (ST) and it failed to inform the watchdog of suspicious transactions.
FIU Update – India 🇮🇳:
🚨 FIU imposed penalty of ₹18.82 crore on Binance ($2.25 million)
✅Reasons for imposing a penalty:
1️⃣ Contact details of the main manager are not provided to the FIU
2️⃣ No mechanism to detect suspicious transactions (ST)
3️⃣ Do not inform the FIU of the ST pic.twitter.com/Akh8AJJsQ9– CA Sonu Jain (cryptocurrency tax expert) (@TheWeb3CA) June 20, 2024
As a result, the exchange giant was fined Rs 18.82 million ($2.25 million), which is the highest fine ever imposed on a crypto company in India for violating the AML regulations in force.
Binance plans to re-enter the Indian market
Remember that in May, Binance received a regulatory nod to operate in India after officially registering with the Financial Intelligence Unit (FIU) alongside Seychelles-based crypto exchange Kucoin. The registration came after the FIU issued a show cause notice to nine cryptocurrency exchanges operating in the country, including KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex.
At the time, the regulatory watchdog asked the Ministry of Electronics and Information Technology to block online access to listed exchanges. Additionally, the order required Apple and Google to cease download options for exchanges on their app stores. In March, Kucoin was fined 3.45 million rupiah ($41,308) by the FIU for violating AML regulations.
The fine imposed by the FIU highlights the challenges Binance faces in adhering to global regulations. In May, Canada’s anti-money laundering agency fined the exchange $4.38 million for similar violations. At the time of writing, Binance has not made any comment on the matter.