In a significant enforcement action, India's Financial Intelligence Unit (FIU) has imposed a fine of 188.2 million rupees ($2.25 million) on Binance, the world's largest cryptocurrency exchange, for operating in the country in violation of local anti-money laundering (AML) regulations.
The penalty highlights the FIU's stringent stance on ensuring compliance with India's anti-money laundering rules, which require virtual digital asset service providers, including crypto exchanges, to be registered with the FIU as reporting entities. Binance, according to the FIU, failed to meet these regulatory obligations.
Despite attempts to seek comments from Binance, the exchange did not immediately respond to an email inquiry regarding the penalty.
This development follows Binance's recent efforts to align with India's regulatory framework. In May, Binance registered with the FIU in a bid to resume its operations in the country, after the watchdog issued show-cause notices to nine offshore exchanges for similar regulatory breaches.
Additionally, the FIU had taken measures to curb unauthorized operations by requesting the Ministry of Electronics and Information Technology to block online access to these non-compliant exchanges. Among these, the crypto exchange KuCoin also faced scrutiny, registering with the FIU in March and incurring a comparatively smaller fine of 3.45 million rupees.
The FIU's actions against Binance are part of a broader global trend of increased regulatory scrutiny on cryptocurrency exchanges. In May, Binance was fined $4.38 million by Canada's anti-money laundering agency for violating AML regulations.
Adding to Binance's regulatory challenges, Changpeng Zhao, the former chief executive of Binance, was sentenced to four months in prison in May by U.S. District Judge Richard Jones in Seattle. Zhao's sentence came after he pleaded guilty to charges of violating U.S. anti-money laundering laws.
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