The Indian Financial Intelligence Unit (FIU) has fined Binance, the world’s largest cryptocurrency exchange, INR 188.2 million ( ~ $2.2 million) for failing to comply with anti-money laundering regulations. This enforcement action reflects India’s increasing enforcement of virtual digital asset service providers (VDASPs) under the Prevention of Money Laundering Act (PMLA) of 2002.
Concurrently, Binance is challenging a $4.4 million penalty by Canada’s financial watchdog.
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The Director of FIU-India determined that Binance operated in India without meeting statutory obligations under the PMLA. This decision came after an in-depth review of Binance’s submissions. Additionally, the order requires Binance to enhance its compliance protocols as per the PMLA and its 2005 rules, which aim to curb money laundering and terrorist financing.
“After considering the written and oral submissions of the Binance, Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated,” the FIU said.
This Indian fine is part of a larger initiative where international exchanges align with local regulations. Recently, Binance and KuCoin were recognized as the first offshore crypto entities registered with FIU, a crucial step in a sector where strict anti-money laundering compliance is required by Indian authorities.
“We are aware of the FIU’s order and are reviewing it now to determine next steps. We are grateful to have the opportunity to continue our mission to serve the vibrant Indian crypto community. 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,” a Binance spokesperson told BeInCrypto
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The push for registration began after December 2023, when FIU-IND issued notices to nine offshore crypto exchanges, including Binance. Concurrently, Apple removed non-compliant platforms from its App Store, and the IT Ministry blocked their websites, urging users to shift to compliant Indian exchanges.
Industry leaders see the initiative to bring crypto exchanges into compliance as a positive development. In an interview with BeInCrypto, Sumit Gupta, the co-founder of the crypto exchange CoinDCX, said that the crypto ecosystem in India is undeniably experiencing growth.
“Any significant shift towards compliance and regulatory frameworks is a positive development for the industry. The recent initiatives to bring exchanges under the PMLA guidelines by the Financial Intelligence Unit (FIU) have brought legitimacy to the space, reinforcing trust among investors and other stakeholders. These are positive steps in the right direction,” Gupta told BeInCrypto.
Simultaneously, in Canada, Binance is appealing against a $4.4 million fine from the Financial Transactions and Reports Analysis Centre of Canada (Fintrac). The agency cited failures in registering as a foreign money services business and not reporting large virtual currency transactions. Binance argues that its Canadian operations were minimal and incidental to its global presence.
This appeal follows a series of regulatory issues for Binance, including a significant $4.3 billion settlement in the United States over anti-money laundering and sanctions violations. Last year, Binance decided to exit the Canadian market, underscoring its regulatory challenges across different regions.
Amanda Wick, former Senior Investigative at the US House of Representatives, told BeInCrypto that enforcement helps an industry mature.
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“Generally, enforcement helps an industry mature by putting the fear of god into the industry’s leaders. Fines and prison time often make it even easier for industry members to calculate the cost/benefit,” Wick told BeInCrypto.
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