Binance, the world’s largest cryptocurrency exchange, has been fined $2.2 million by India’s Financial Intelligence Unit for violating the country’s anti-money laundering rules. The exchange was found to not adhere to multiple Prevention of Money Laundering Act regulations, including reporting transaction records and complying with suspicious activity reporting requirements. As a Virtual Digital Asset Service Provider, Binance is required to keep and report transaction records and enforce strict AML measures, which it reportedly failed to do.
In January, Indian authorities issued show-cause notices to Binance and other offshore exchanges for operating illegally in the country. However, last month, Binance and KuCoin became the first overseas crypto-focused entities to secure conditional approval from India’s FIU, contingent on paying a fine after a hearing with the financial agency. This approval signifies a step towards compliance with India’s regulations and could potentially allow Binance to operate in the country legally in the future.
This financial penalty from India comes amid a series of global regulatory challenges for Binance. In Canada, the Financial Transactions and Reports Analysis Centre fined the exchange $4.4 million for failing to register and report large cryptocurrency transactions. Binance has disputed these allegations and the administrative monetary penalty. Additionally, Binance.US, the exchange’s American subsidiary, is facing regulatory scrutiny from state authorities in the US, with several states either canceling or refusing to renew its money transmitter licenses.
The regulatory woes faced by Binance in various countries highlight the challenges that cryptocurrency exchanges encounter when operating in a heavily regulated environment. Compliance with anti-money laundering and counter-terrorism financing regulations is crucial for exchanges to maintain a good standing with regulators and continue serving customers globally. Despite these challenges, Binance’s efforts to secure conditional approval in India demonstrate a willingness to work with regulators and address compliance issues. It remains to be seen how the exchange will navigate the regulatory landscape in different jurisdictions and adapt its operations to meet varying requirements.