Financial Intelligence Unit Penalizes Binance $2.25 Million For Anti-Money Laundering Violations

The Financial Intelligence Unit of India (FIU-IND) has imposed a penalty on Binance, the world's largest cryptocurrency exchange, for violations of anti-money laundering (AML) regulations. The fine amounts to Rs 18.82 crore ($2.25 million) against the offshore cryptocurrency exchange. According to the FIU-IND, Binance failed to comply with the statutory obligations outlined under the Prevention of Money Laundering Act (PMLA) of 2002 and its associated rules, particularly those related to the maintenance of records and reporting of suspicious transactions. Binance operates as a Virtual Digital Asset Service Provider (VDA SP), a designation that makes it a Reporting Entity (RE) under Section 2(1) (wa) of the PMLA. As an RE, Binance is required to adhere to stringent AML and combating the financing of terrorism (CFT) measures. This includes maintaining records of all transactions and reporting suspicious activities to the authorities. The FIU-IND initiated action against Binance following the platform's continued operations in India without adequate compliance with these statutory obligations. A notice was issued to Binance on December 28, 2023 which compelled the company to explain its non-compliance and demonstrate why appropriate enforcement action should not be taken. Despite the opportunity to present written and oral submissions, the FIU-IND found the charges against Binance to be substantiated. The violations identified by the FIU-IND included contraventions of: 1. Section 12(1) of the PMLA read with Rules 7(1) of the PMLA Rules. 2. Section 12(1) of the PMLA read with Rules 3(1)(D) and 7(3) of the PMLA Rules. 3. Section 12(1) of the PMLA read with Rule 8(2) of the PMLA Rules. These contraventions relate to the failure to maintain records of transactions and report them as required under the AML/CFT framework. In addition to the monetary penalty, the FIU-IND has issued specific directives to Binance to ensure diligent compliance with the obligations outlined in Chapter IV of the PMLA, in conjunction with the PMLA Maintenance of Record Rules of 2005. The FIU-IND's actions follow previous warnings and restrictions imposed on several crypto exchanges, including Binance, KuCoin, and OKX, for alleged violations of India's AML laws. The crackdown led to the blocking of online access to these exchanges in India until they complied with the local regulations. Click Here To Read/Download Order

Financial Intelligence Unit Penalizes Binance $2.25 Million For Anti-Money Laundering Violations

Rajesh Kumar