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Binance Slapped with $2.3M Fine by India’s Financial Watchdog for AML Violations

Last Updated June 20, 2024 9:46 AM
Teuta Franjkovic
Last Updated June 20, 2024 9:46 AM

Key Takeaways

  • Binance was fined and briefly banned in India for violating anti-money laundering laws.
  • The exchange faced global regulatory challenges, including fines, legal battles, and executive arrests.
  • Binance.US, the American branch of Binance, recently lost licenses in seven states and halted new user onboarding due to compliance issues.

India’s Financial Intelligence Unit (FIU) has imposed a fine of 188.2 million rupees (approximately $2.26 million) on Binance, the world’s largest cryptocurrency exchange by volume, for breaching the nation’s anti-money laundering laws.

It is still uncertain when Binance will recommence its operations in India.

Binance Fined and Briefly Banned in India, Trying to Resume Operations

Last December, the Indian Financial Intelligence Unit (FIU) blocked access to Binance and eight other foreign cryptocurrency exchanges operating in India. The order also compelled Apple and Google to remove these crypto exchanges from their app stores for local users.

In India, cryptocurrency exchanges are required to register  with the FIU as reporting entities and comply with local anti-money laundering regulations. Additionally, there are mandates to withhold taxes on cryptocurrency transactions and profits.

Seychelles-based KuCoin, one of the blacklisted exchanges, quickly adhered  to Indian regulations by complying within a month and paying a penalty of 3.45 million rupees. While Binance has not made any official statements, reports indicate that the exchange is looking to resume operations in India by settling the penalty.

Binance completed its registration with the FIU  last May, a step that will enable it to restart its services in India.

Binance India

The FIU announcement  stated that after reviewing the written and oral submissions from Binance’s director, the FIU-IND determined that the evidence on record substantiated the charges against Binance.

The fine imposed on Binance by the FIU-IND cites several violations, including the failure to maintain and report transaction records, the non-provision of necessary information to authorities, and the failure to preserve records as required by law.

Binance Facing Fines, Legal Battles

As the largest cryptocurrency exchange, Binance has encountered regulatory issues worldwide. Originally, the exchange rapidly expanded internationally without securing local licenses, a tactic it revised following significant regulatory scrutiny.

In Canada , the anti-money laundering authority fined Binance $4.38 million in May for breaching local regulations. Binance contested this fine, claiming its services were not aimed at Canadian residents. Notably, the exchange had already planned to withdraw from the Canadian market by May 2023.

In February, Nigerian authorities detained two executives from Binance on accusations of tax evasion and money laundering involving the company. In the latest development, the Nigerian Federal High Court in Abuja has dismissed a fundamental rights enforcement suit filed by Nadeem Anjarwalla, a Binance executive who fled the country.

Binance.US Loses Licenses in 7 States, Halts New User Onboarding Amid Regulatory Crackdown

Recently, Binance.US, the American branch of Binance.com, had its money-transmitting license revoked in seven states. Additionally, the exchange has halted new user onboarding in Connecticut, Georgia, Ohio, Minnesota, and Washington.

More US states are either revoking or not renewing the money transmitter licenses of BAM Trading Services Inc., commonly referred to as Binance.US, due to compliance issues and legal troubles related to its former CEO, Changpeng Zhao (CZ).

The North Dakota Department of Financial Institutions recently declared that it has revoked the money transmitter license of Binance.US.

Changpeng Zhao is currently serving a four-month prison sentence following Binance’s settlement with the US Department of Justice (DOJ). He pleaded guilty to violations of the Bank Secrecy Act. As part of the plea agreement, Binance must pay $4.3 billion in fines and penalties. Initially, the DOJ had sought a three-year sentence for Zhao.

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