Binance, the largest crypto exchange by trading volume, has once again come under regulatory pressure after getting fined by India’s regulatory watchdog the Financial Intelligence Unit (FIU) on July 20. The exchange, which is still struggling with navigating global financial waters, has received a $2.25 million fine for violating Anti-Money Laundering (AML) laws in the country.
Crypto exchanges and other virtual digital asset service providers (VDASP) are obligated to register with the FIU before operating in the country according to Indian regulations, however, Binance has failed to comply, hence the hefty fine.
An Indian crypto tax expert, CA Sonu Jain, shared the original document on X (formerly Twitter), breaking down the reasons for the penalty. According to the post, the fine was imposed because Binance had failed to provide the principal officer details to the FIU, there was no mechanism in place to detect suspicious transactions (ST), and failing to inform the watchdog of suspicious transactions.
#binance Update from FIU – India : FIU imposed penalty of ₹18.82 Crores on Binance ($2.25 million)Reasons for imposing Penalty:1⃣ Principal officer details not provided to FIU2⃣ No mechanism to detect suspicious transactions (ST)3⃣ Not informing FIU of ST pic.twitter.com/Akh8AJJsQ9
— CA Sonu Jain (Crypto Tax Expert) (@TheWeb3CA) June 20, 2024
Consequently, the exchange giant was fined 18.82 million rupees ($2.25 million), going down as the highest fine ever imposed on a crypto company in India for violating the laid down AML regulations.
Binance Plan to Re-enter the Indian Market
Recall that in May, Binance received a regulatory nod to operate in India after officially registering with the Financial Intelligence Unit (FIU) alongside the Seychelles-based crypto exchange Kucoin. The registration came after the FIU issued a show-cause notice to nine cryptocurrency exchanges operating in the country including KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
At the time the regulatory watchdog instructed the Ministry of Electronics and Information Technology to block online access to the listed exchanges. Also, the order mandated Apple and Google to cease download options for the exchanges on their application stores. In March, Kucoin received a fine of 3.45 million rupees ($41,308) from the FIU for violating AML regulations.
The imposed fine by the FIU underscores the challenges faced by Binance in adhering to global regulations. In May, the Canadian anti-money laundering agency imposed a penalty of $4.38 million on the exchange for similar violations. At the time of writing, Binance has not made any comment on the issue.
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