Binance Fined $2.25 Million in India for Breaching Anti-Money Laundering Regulations, Exchange Vouches Cooperation

India issued a notice questioning Binance on its services being provided to users without complying with the PMLA laws.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 20 June 2024 17:10 IST

Binance Fined $2.25 Million in India for Breaching Anti-Money Laundering Regulations, Exchange Vouches Cooperation

Photo Credit: Binance

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India's Financial Intelligence Unit (FIU) has imposed a fine of $2.25 million (roughly Rs. 18.8 crore) on Binance. The financial watchdog announced the development on Thursday, June 20. India has claimed that the crypto exchange, touted as the largest in the world, was not adhering to the Prevention of Money Laundering Act, 2002 (PMLA), which is mandated for crypto firms to comply with in order to keep their operations running in the country.

India's FIU explains fine on Binance

As per the official statement shared by the exchange, India had issued a notice questioning Binance on its service being provided to Indian citizens without complying with the PMLA laws.

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“Notice dated December 28, 2023, was issued to Binance pursuant to Section 13 of the Act, compelling Binance to demonstrate why appropriate action should not be undertaken against it for its dereliction of duties under the Act, despite its status as a reporting entity owing to its operations as a Virtual Digital Asset Service Provider,” FIU's statement said.

Binance was supposedly given both written and verbal communication about FIU's concerns. The FIU has said that the charges regarding Binance having violated India's legal requirements to operate its business here stand substantiated.

“Consequently, the Director FIU-IND vide order dated 19th June, 2024 in exercise of powers under Section 13 PMLA, imposed a total penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only),” the financial authority noted.

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The US-based exchange has been directed to ensure that it is diligently complying with India's PMLA act as soon as possible.

Binance Reacts

In a statement shared with Gadgets360, a Binance spokesperson said that the exchange is presently reviewing the order it has received from the FIU-IND.

"We wish to work with the FIU as a reporting entity and we are enthusiastic about reentering the Indian market to contribute positively, should we be able to do so in the near future. We remain dedicated to ensuring compliance with regulatory authorities," the company spokesperson said.

India's crypto circle reacts

Talking to Gadgets360, the members of India's crypto circle have asked other Web3 players in the nation to see this fining of Binance as a lesson of the consequences that firms could come face-to-face with for not complying with the laws.

“This significant penalty is a clear indication of the increasing scrutiny and regulation in the digital asset space. It's essential to stay informed and aware of such developments to navigate this evolving landscape successfully,” Shivam Thakral, CEO of BuyUcoin told Gadgets360. “I believe that the regulations are getting more organised for crypto currency exchanges, globally. The need for compliance is critical for user protection and to conduct business in a fearless environment.”

India's crypto stakeholders realise that the nation has potential to become a leader in the Web3 space because of its big developer pool. Hence, they believe that complying with legal requirements is important to make the crypto sector, otherwise infamous for being risky and volatile, safer for the investor community to engage with.

“According to a research report, India is one of the top countries in terms of digital assets ownership. In such a large digital asset market, it is imperative to implement a regulatory framework for the protection of user funds and for providing a friendly environment for businesses,” Manhar Garegrat, Country Head India and Global Partnerships, Liminal Custody told Gadgets360.

Binance claimed that it registered with the FIU in India last month. The exchange did not want to lose the opportunity to amass India's crypto community onto its platform.

The crypto exchange has previously had run-ins with the American and Nigerian authorities over alleged non-compliance of their respective rules overseeing the crypto sector.

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Further reading: Cryptocurrency, Binance, FIU, PMLA, Crypto

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More