Binance faces $2.2 million penalty from India’s financial watchdog for AML breaches

The Indian Financial Intelligence Unit (FIU) has fined Binance 188.2 million rupees ($2.25 million) for violations of India’s Prevention of Money Laundering Act (PLMA) while operating within its jurisdiction, according to an order dated June 19, 2024.

In particular, the FIU found that Binance did not comply with various PMLA regulations, including maintaining proper records of financial transactions, adhering to reporting requirements for suspicious activities, and implementing measures to prevent money laundering.

As a Virtual Digital Asset Service Provider, Binance is recognized as a reporting entity under the PMLA, necessitating the maintenance and reporting of transaction records and the implementation of stringent AML measures.

However, the FIU-IND’s investigation found that Binance did not fulfill these requirements. In January this year, Indian authorities issued show-cause notices to Binance and several other offshore crypto exchanges, eventually leading to their exit from the Indian market for unauthorized operations.

Last month, Binance, along with KuCoin, received conditional approval from the FIU. This approval was granted on the condition that Binance would pay a fine after a hearing with the FIU.

The FIU also outlined in the order that it has issued specific directions for Binance to ensure future compliance with PMLA and its associated Maintenance of Record Rules.

Binance has not yet issued a public statement regarding the penalty. The latest news comes amid a growing trend of regulatory scrutiny surrounding crypto exchanges in India.

Binance’s regulatory troubles extend beyond India. Last month, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) also imposed a $4.4 million administrative monetary penalty on Binance for not registering as a foreign money services business and for failing to report large digital currency transactions. Binance has contested these allegations.

Meanwhile, Binance’s American arm, Binance.US, has faced increasing challenges from state authorities in the US. Numerous states, including North Dakota, North Carolina, Alaska, Florida, Maine, and Oregon, have revoked or declined to renew the exchange’s money transmitter licenses due to compliance issues and legal complications.