FIU Slaps INR 18.82 Cr Fine On Binance For Violating PMLA

Crypto Exchange Binance Gets INR 722 Cr GST Demand Notice

SUMMARY

Binance failed to comply with multiple provisions of the Prevention of Money Laundering Act, 2002, a notification by the Financial Intelligence Unit said

Binance was among the nine offshore crypto exchanges that received show cause notices in December last year from the FIU for illegally operating in the country

The development comes days after Binance discontinued the cash payment option for peer to peer (P2P) trades in India

Cryptocurrency exchange Binance, which was banned by the Indian government in January for non-compliance with anti-money laundering laws, will have to cough up INR 18.82 Cr (around $2.25 Mn) in fine to resume operations in the country.

As per a notification issued by the Finance Intelligence Unit (FIU) of the finance ministry on Wednesday (June 19), Binance failed to comply with multiple provisions of the Prevention of Money Laundering Act, 2002 (PMLA).

“After considering the written and oral submissions of Binance, the Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated,” the notification said.

“Furthermore, specific directions have also been issued to Binance to ensure diligent compliance with the obligations outlined in Chapter IV of the Prevention of Money Laundering Act (PMLA) of 2002, in conjunction with the PMLA Maintenance of Record Rules (PMLA Rules) of 2005 for prevention of money laundering activities and combating the financing of terrorism (AMLCFT),” it added.

The development comes days after Binance discontinued the cash payment option for peer to peer (P2P) trades in India.

It was earlier reported that the FIU had cleared applications of Binance and Kucoin to operate as virtual asset service providers in India.

While Kucoin has paid fines to the tune of INR 35.5 Lakh for past non-compliances, Binance was reportedly planning a comeback to India after paying a $2 Mn penalty.

It is pertinent to note that Binance was among the nine offshore crypto exchanges that received show cause notices in December last year from the FIU for illegally operating in the country and running afoul of India’s anti-money laundering laws. These offshore crypto exchanges were not registered with the FIU as virtual asset service providers.

As a result, the government blocked access to the websites of these exchanges and their apps were delisted from Google and Apple’s app stores.

In March 2023, the Indian government brought crypto businesses under the provisions of the PMLA, mandating them to report suspicious transactions and conduct customer due diligence among others.

As per the existing rules, offshore crypto exchanges are required to obtain a licence from the FIU to operate as virtual asset service providers to trade in India.