Binance Slapped with $2.25 Million Fine by Indian Financial Regulator

India’s Financial Intelligence Unit (FIU) has fined Binance, the world’s largest cryptocurrency exchange, $2.25 million for allegedly operating in the country without complying with anti-money laundering regulations. This marks the first time an offshore crypto exchange has been penalized by the FIU.

Reportedly, Binance, along with KuCoin, has become the first offshore crypto company to be cleared by India’s FIU upon settlement.

Previously, Indian authorities warned several crypto exchanges, including Binance, KuCoin, and OKX, alleging violations of the nation’s anti-money laundering laws. After issuing notices to these exchanges, the FIU restricted them, blocking access to their websites. Following these actions, various sources commented on the matter, sharing differing views.

While some predicted Binance’s return to India with compliance under current laws, including the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework, others questioned the platform’s initial reluctance to adhere to the framework.

One source criticized the platform, stating that “no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities.”

According to the recent notice, Binance is a “Reporting Entity” (RE) under Section 2 (1). The FIU’s warning against the platform highlighted Binance’s alleged non-compliance despite being an RE. The notice read:

“Due to Binance’s…operations within India without adhering to its statutory obligations under the PMLA, a Notice…was issued to Binance…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.”

Considering Binance’s submissions, the FIU determined the charges against the exchange as “substantiated.” Therefore, the FIU Director decided to impose a penalty of $2.25 million on Binance. Additionally, the authority provided the platform with “specific directions to ensure strict compliance with the obligations.”