The Finance Intelligence Unit-India (FIU-IND), part of the Finance Ministry, imposed a Rs. 18.82 crore ($2.25 million) against the prominent cryptocurrency exchange Binance. This fine comes in response to Binance’s failures to adhere to the stringent requirements outlined in the Prevention of Money Laundering Act (PMLA) of 2002.
Binance, being a virtual digital asset service provider, is categorised as a ‘reporting entity’ under the PMLA. This classification obligates adherence to certain sections of the PMLA, 2002, and the PML (Maintenance of Records) Rules, 2005.
These rules require entities to keep detailed records of transactions and notify authorities of any suspicious activities. FIU-IND stated that Binance did not fulfil these requirements, resulting in a penalty.
“Binance by virtue of operating as Virtual Digital Asset Service Provider (VDA SP) carrying on designated business or profession as other activities under Section 2 (sa)(vi) of the Prevention of Money Laundering Act (PMLA), 2002 is a Reporting Entity (RE) in terms of Section 2(1) (wa) of the Act”, said the order. “Consequently, due to Binance’s ongoing provision of services to Indian clients and operations within India without adhering to its statutory obligations under the PMLA a 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.”
Following a thorough review of Binance’s written and oral responses, the FIU-IND concluded that the exchange had breached its duties under the Act. Consequently, Binance has been directed to ensure full compliance with Chapter 4 of the PMLA, 2002, which details the responsibilities of banking companies, financial institutions, and intermediaries in preventing money laundering and combating the financing of terrorism.
This penalty is part of a broader crackdown by Indian authorities on non-compliant cryptocurrency platforms. In December, the FIU-IND requested the IT Ministry block the URLs of nine offshore cryptocurrency and virtual digital assets platforms, including Binance, due to their failure to comply with the PMLA, 2002, notes MediaNama.
During the Winter session of Parliament last year, the Ministry of Finance revealed that 28 cryptocurrency firms had registered with FIU-IND. This list included WazirX, AQN Finance, Coinswitch, Rario, Bytex, and CoinDCX. These companies are now subject to rigorous regulatory oversight to prevent money laundering and ensure financial transparency.
“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 shortly. We remain dedicated to maintaining transparency, fostering cooperation, and ensuring compliance with regulatory authorities,” a Binance spokesperson told Cointelegraph.
This isn’t the first time Binance has faced issues with government authorities. In May, Canada imposed a $4.4 million fine on Binance and in February, Nigeria detained two Binance executives on charges of tax evasion and money laundering that were later dropped.
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