India’s Financial Intelligence Unit (FIU) recently imposed a fine of $2.25 million on Binance, the largest cryptocurrency exchange globally. The action arises from the claims that Binance operated in the country without observing the anti-money laundering (AML) laws. This is Balancer, the first time the FIU has punished an offshore crypto exchange, a significant event.
The scrutiny of the FIU did not end at the other exchanges, either KuCoin or Binance, which was recently removed from ClearColorIn India’s FIU list after the settlement. Earlier this year, the Indian authorities sent letters of caution to Binance, KuCoin, and OKX, stating that their laws violated the nation’s AML legislation. After the warnings above, the FIU limited the accessibility of their websites by enacting the Indian users’ permission to access these websites.
India Fines Binance for AML Non-Compliance
This notice raised concerns that Binance is classified as a Reporting Entity under section 2 (1) of the Prevention of Money Laundering Act (PMLA). However, Binance was accused of failing to fulfill its legal requirements under the Act, which were supposed to be provided by the platform of its use. The notice stated: “As Binance was operating in India without fulfilling legal requirements and policies followed under the Prevention of Money Laundering Act, the Indian authorities served a ‘Notice’ to Binance requesting the reason why it should not face appropriate legal actions for violating duties under the Act since it is a Reporting Entity involved in the Virtual Digital Asset Service Provider business.”
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Following a review of Binance’s submissions, the FIU concluded that the charges against the exchange were substantiated. Consequently, the FIU Director imposed a penalty of $2.25 million on Binance and issued specific directions to ensure the platform’s strict compliance with its obligations.
The FIU’s actions elicited a wide range of reactions. Industry experts predict that Binance will return to India, following current laws such as PMLA and VDA taxation. Some people have complained that before Binance decided to change its policy and generally follow the rules, it refused to comply with regulatory measures, claiming that no world giant should be treated like other jurisdictions and deprived of its special status.
Therefore, Binance’s penalty for allowing users in India to trade through its site and the regulatory measures found by FIU indicate that cryptocurrency exchanges in India are under increasing regulatory pressure. Thus, AML regulation compliance remains as important as before in providing services to exchange offices operating in the country as the crypto market keeps developing.
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.