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Why Did FIU India Fine Binance Cryptocurrency Exchange Rs 18 Crore? Full Details Inside



NEW DELHI: Binance, the world’s largest crypto exchange, has been fined a hefty $2.25 million (Rs 18.82 crore) by the country’s Financial Intelligence Unit (FIU). The penalty stems from the exchange’s failure to comply with India’s anti-money laundering (AML) regulations.

The FIU, a financial watchdog under the Ministry of Finance, conducted an investigation that revealed Binance’s violation of Chapter IV of the Prevention of Money Laundering Act (PMLA) 2002. This act mandates that all virtual digital asset service providers, including crypto exchanges operating in India, must register with the FIU and implement robust AML measures. These measures are crucial for preventing financial crimes like money laundering and financing of terrorism.

“After considering all the evidence, including written and oral submissions from Binance, the Director of FIU-IND concluded that the charges against them were valid,” the FIU stated in an official notification.

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The notification further directed Binance to comply with PMLA regulations and maintain records of all transactions. This data will be crucial for authorities to track suspicious activity and combat money laundering and terrorist financing.

India Tightens Grip on Crypto Exchanges

This incident is not an isolated one. Earlier this year, the FIU took a strong stance against unregistered crypto exchanges operating in India. Nine offshore exchanges were blocked for failing to adhere to PMLA regulations. Additionally, Binance’s competitor, KuCoin, faced a smaller penalty of Rs 34.5 lakh for similar AML violations.

These actions demonstrate India’s commitment to regulating the cryptocurrency market and ensuring that crypto exchanges operating within its borders comply with AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) norms.

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Global Scrutiny for Binance

India isn’t the only country scrutinizing Binance’s AML practices. In May, the Canadian anti-money laundering agency imposed a significant $4.38 million fine on the exchange for similar violations.

Furthermore, unconfirmed reports surfaced in May suggesting that Changpeng Zhao, the former CEO of Binance, received a four-month prison sentence in the United States for violating AML laws. However, the accuracy of these reports regarding Mr. Zhao’s conviction remains unverified.

The recent wave of fines and legal actions against Binance showcases the intensifying global scrutiny on cryptocurrency exchanges. As the digital asset landscape continues to evolve, governments worldwide are taking steps to mitigate potential financial risks associated with cryptocurrencies by demanding stricter compliance with AML/CFT regulations from crypto exchanges operating within their jurisdictions. This trend is likely to persist as governments strive to find a balance between fostering innovation in the crypto space and protecting their financial systems from potential threats.

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