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Binance Fined $2.25 Million for Flouting Anti-Money Laundering Rules in India

On June 20th, 2024, India’s Financial Intelligence Unit (FIU) hit cryptocurrency giant Binance with a fine of $2.25 million (approximately Rs. 18.8 crore). The penalty came after the FIU accused Binance of failing to follow India’s Prevention of Money Laundering Act (PMLA) of 2002. This law requires all crypto businesses operating in India to comply with its regulations.

India Questions Binance’s Compliance

According to an official statement, the FIU issued a notice to Binance back in December 2023. This notice questioned whether Binance’s services to Indian users adhered to PMLA rules. The FIU explained that Binance, as a “Virtual Digital Asset Service Provider,” is considered a “reporting entity” under PMLA and must comply with the law.

The FIU claims they communicated their concerns to Binance verbally and in writing. They believe evidence proves Binance violated Indian regulations for operating a crypto business in the country.

Financial Penalty and Compliance Requirements

As a result, the FIU director imposed a penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only) on June 19th, 2024. This penalty aims to enforce compliance with PMLA. As of now, Binance has not commented on the situation.

India’s Crypto Community Reacts

Members of India’s crypto industry reacted to the news by urging other Web3 companies to learn from Binance’s mistake. Shivam Thakral, CEO of BuyUcoin, emphasized the importance of staying informed about regulations in this “evolving landscape.” He believes regulations are becoming stricter globally, and compliance is key to user protection and a healthy business environment.

Considering India’s vast developer pool, stakeholders see the country as a potential leader in Web3. However, they believe legal compliance is crucial for making the crypto sector safer for investors, who often view it as risky and volatile. Manhar Garegrat of Liminal Custody pointed to India’s large digital asset market and stressed the need for regulations to protect user funds and foster a business-friendly environment.

Binance’s Registration and Past Issues

While facing the fine, Binance revealed they registered with the FIU last month. This move suggests their desire to access India’s thriving crypto community. It’s worth noting that Binance has faced similar issues with regulatory bodies in the US and Nigeria regarding compliance with their respective crypto regulations.

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