New Delhi, June 20, 2024 — India’s Financial Intelligence Unit (FIU) has imposed a hefty fine of $2.25 million on Binance, the world’s largest cryptocurrency exchange, for operating in the country without adhering to local anti-money laundering (AML) regulations. This penalty underscores India’s stringent stance on enforcing compliance within the burgeoning digital asset sector.
According to the FIU, virtual digital asset service providers, such as crypto exchanges, must register as reporting entities and comply with AML rules to operate legally within India. Binance’s failure to meet these requirements led to the significant financial penalty. Despite attempts to reach Binance for a comment, the exchange did not immediately respond.
In response to the FIU’s actions, Binance registered with the agency in May, attempting to resume operations in India. This registration followed the issuance of show-cause notices to nine offshore exchanges, including Binance, for violating local regulations. The FIU also recommended that the Ministry of Electronics and Information Technology block online access to these non-compliant exchanges.
In contrast, KuCoin, another prominent crypto exchange, registered with the FIU in March and faced a relatively smaller penalty of 3.45 million Indian rupees for its violations. This disparity highlights the varying degrees of compliance and penalties among international crypto operators.
Binance’s legal troubles extend beyond India. In May, the company faced a substantial fine of $4.38 million from Canada’s anti-money laundering agency for similar violations. Additionally, Binance’s former CEO, Changpeng Zhao, was sentenced to four months in prison by US District Judge Richard Jones in Seattle, following a guilty plea for breaching US anti-money laundering laws.
These developments reflect the increasing regulatory scrutiny that major cryptocurrency exchanges face globally. As nations tighten their AML regulations, exchanges like Binance must navigate complex legal landscapes to ensure compliance and maintain operations.
The FIU’s actions and the substantial penalties imposed signal a clear message to the cryptocurrency industry: adherence to anti-money laundering laws is non-negotiable. This case serves as a cautionary tale for other exchanges operating in India and worldwide, emphasizing the importance of regulatory compliance in the rapidly evolving digital asset market.