India’s Financial Intelligence Unit has fined crypto exchange Binance $2.25 million (₹18.8 crore) for non-compliance with anti-money laundering (AML) regulations. Binance’s return to India is seen as challenging, especially after the government’s tax measures significantly reduced daily trades on some major local crypto exchanges. This fine follows Binance’s global scrutiny and former CEO Changpeng Zhao (CZ)’s legal issues.
Indian Authority Fines Crypto Exchange Binance $2.25 Million for AML Violations
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India Fines Binance $2.25 Million
Binance, the world’s largest cryptocurrency exchange, has been fined $2.25 million (₹18.8 crore) by India’s Financial Intelligence Unit (FIU-IND) for non-compliance with domestic anti-money laundering (AML) regulations.
This fine, imposed on Wednesday, highlights a critical regulatory breach that occurred before December 2023. India’s regulatory framework mandates that crypto asset service providers, including cryptocurrency exchanges, must register with the FIU as reporting entities and adhere to stringent AML rules.
The notice, seen by Mint publication, states that entities representing Binance before FIU-IND included its facilities in the Seychelles, Cayman Islands, and Switzerland. It adds:
Specific directions have been issued to Binance to ensure diligent compliance with the obligations outlined in Chapter IV of PMLA [Prevention of Money Laundering Act, 2002].
Binance’s return to the Indian crypto market may present significant challenges for local exchanges. The Indian crypto industry has faced substantial difficulties since 2022, when the government introduced a 30% tax on crypto earnings and a 1% tax deducted at source (TDS) on every trade. These stringent tax measures led to a dramatic 90% decrease in daily average trades on major exchanges.
Binance has been facing scrutiny worldwide. In November 2023, former CEO and founder Changpeng Zhao (CZ) pleaded guilty to money laundering charges brought by U.S. authorities and subsequently resigned from his position. This legal development culminated in Binance agreeing to a substantial $4.3 billion settlement. Zhao is currently serving a four-month prison sentence in the U.S.
Recently, Indian Prime Minister Narendra Modi appointed Finance Minister Nirmala Sitharaman to serve another term as the country’s finance minister. Sitharaman has consistently emphasized the necessity of international cooperation in regulating crypto assets, given their inherently cross-border nature and the technological complexities involved. She has maintained a cautious stance on crypto, firmly asserting that they cannot be considered legal tender in India. This position aligns with the concerns raised by the Reserve Bank of India (RBI), the country’s central bank, which has repeatedly voiced apprehensions about the financial stability risks posed by cryptocurrencies.
What do you think about Binance returning to India and paying a $2.25 million fine? Let us know in the comments section below.
