In a significant regulatory action, India's FIU has fined Binance, the largest cryptocurrency exchange, approximately $2.2 million (188.2 million rupees) for failing to adhere to the country's anti-money laundering (AML) laws.
Binance is a Virtual Asset Service Provider (VASP), which makes it a reporting entity (RE) under Section 2(sa)(vi) of the Prevention of Money-Laundering Act. This means it has to keep and report on transaction records and make sure it has good anti-money laundering measures in place, according to Cointelegraph. However, the FIU found that Binance didn't follow these rules when they were serving Indian clients.
"After considering the written and oral submissions of Binance, the Director of FIU, based on the material available on record, found that the charges against Binance were substantiated," the FIU stated.
This fine was announced after a series of show-cause notices were issued to Binance and other offshore crypto exchanges in January 2024, accusing them of operating illegally within India. Despite these challenges, Binance and KuCoin were later approved by the FIU in May, conditional upon penalty payments.
The FIU’s decision underscores the importance of compliance with AML and combating the financing of terrorism (CFT) regulations for all industry participants. Dilip Chenoy, Chairman of the Bharat Web3 Association, also emphasized the necessity for strict adherence to these laws. The FIU's order includes specific directions to ensure Binance meets all legal obligations moving forward.
This development highlights the increasing regulatory scrutiny facing crypto exchanges. The penalty imposed on Binance serves as a warning to other platforms about the importance of compliance in the rapidly evolving regulatory landscape.
Looking ahead, as the cryptocurrency industry continues to grow, adherence to local and international regulations remains crucial for maintaining operational legitimacy and trust.
See also: Argentina's new President advocates for Bitcoin amid economic reform
