Aligning with India’s increasing regulatory concerns, the Financial Intelligence Unit-India (FIU-IND) has imposed a penalty of ₹18.82 crore on Binance for multiple violations of the Prevention of Money Laundering Act (PMLA), 2002. This significant decision came after a comprehensive review of Binance’s operations as a Virtual Digital Asset Service Provider (VDA SP).
Binance was initially issued a notice on December 28, 2023, under Section 13 of the PMLA, demanding compliance explanations. Following written and oral submissions from Binance, FIU-IND substantiated the charges and enforced the fine, highlighting violations related to record maintenance and reporting standards. The order stated, indicating its specific applicability, “The summary of the instant order is only representational in nature and does not hold any legal significance.”
India’s Regulatory Crackdown on Crypto Exchanges
This fine is part of a broader regulatory crackdown in India. In 2022, India imposed heavy taxes on crypto transactions, including a 30% tax on profits and a 1% tax deducted at source on all transactions, which severely impacted trading volumes. Additionally, India’s government has issued compliance notices to several offshore crypto exchanges, intensifying scrutiny on the sector. Earlier this year, Binance agreed to pay a $2 million penalty to re-enter the Indian market, signaling its intent to comply with local regulations.
Binance Margin Expands Trading Options with New FDUSD, USDC, and USDT PairsGovernment’s Requirements for Crypto Compliance
India’s stringent regulatory framework demands comprehensive compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) measures. The government emphasizes the importance of a controlled approach to prevent illicit activities associated with cryptocurrencies. In March 2024, OKX, the world’s second-largest crypto exchange by trading volume, exited the Indian market due to regulatory scrutiny and compliance challenges.
Binance’s Legal Challenges Globally
Binance is no stranger to regulatory challenges. Besides India, Binance has faced scrutiny in various jurisdictions worldwide. The exchange recently announced significant operational changes. These changes are in response to upcoming restrictions in the European Union under the new Markets in Crypto-Assets Regulation (MiCA). MiCA, which will take effect at the end of June, will require Binance to restrict access to unregulated stablecoins.
