India Financial Watchdog for AML Violations hits Binance with $2.25M Fine

India’s Financial Intelligence Unit (FIU) has imposed a 188.2 million Indian rupee fine on the largest cryptocurrency exchange, Binance, for violating the rules under the country’s Prevention of Money Laundering Act. 

The agency made the announcement on Thursday, June 19, that the fine is applicable for numerous infractions of the 2002 Prevention of Money Laundering Act (PMLA). The FIU further stated that Binance has received explicit instructions from it to guarantee careful adherence to the nation's anti-money laundering regulations. 

The regulator is said to have sent a notice in December 2023 "compelling Binance to demonstrate why appropriate action should not be undertaken against it," presumably due to the exchange's past provision of services to local clients and its operations in India without registration under the country's anti-money laundering (AML) laws. 

In its fine against Binance, the FIU lists several violations, such as failing to keep and report transaction records, not providing authorities with the necessary information, and not keeping records for the required amount of time.

In May, Binance and KuCoin became the first offshore cryptocurrency-related entities to receive approval from the Financial Intelligence Unit. After an FIU hearing, the approval was conditional upon the payment of a fine.

Regarding the penalty, Binance has not yet made a public statement. The most recent information is released in the midst of an increasing trend of regulatory investigations into cryptocurrency exchanges in India. 

The regulatory issues with Binance go beyond India. A $4.4 million administrative monetary penalty was also levied against Binance last month by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for the company's failure to register as a foreign money services business and to report significant transactions involving digital currencies. These claims have been denied by Binance. 

Additionally, Binance is the target of a tax evasion case brought by the Federal Internal Revenue Service (FIRS) in Nigeria and has been charged by the Economic and Financial Crimes Commission (EFCC) with using its platform to launder more than $35 million. Authorities tightened regulation of cryptocurrency trading platforms after the exchange was charged with manipulating foreign exchange (FX) rates. Two prominent executives of Binance, 39-year-old American Tigran Gambaryan, who oversees financial crime compliance at Binance, and 37-year-old British-Kenyan Nadeem Anjarwalla, who serves as regional manager for Africa, were arrested in February by the authorities.

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