FIU Imposes Rs 18.82 Crore Penalty On Binance For Violating Anti-Money Laundering Laws

The Financial Intelligence Unit has slapped a fine of Rs 18.82 crore on cryptocurrency exchange Binance for violating India's anti-money laundering law. Binance, founded by Changpeng Zhao, operates the world’s largest exchange for Crypto currencies by volume. Reports Krishnanand. Krishnanand

Hyderabad:The Financial Intelligence Unit (FIU) under the Ministry of Finance Thursday imposed a fine of Rs 18.82 crore on cryptocurrency exchange Binance for violating India’'s anti-money laundering law – the Prevention of Money Laundering Act of 2002. The company founded by Changpeng Zhao operates the world’s largest exchange for Crypto currencies by volume.

In December last year, the Financial Intelligence Unit (FIU-IND) issued a notice to Binance for offering services to its customers and clients in India without adhering to the country's statutory framework.

In a statement issued on Thursday (June 20), the FIU said Binance by virtue of operating as a Virtual Digital Asset Service Provider (VDA-SP), carrying on designated business or profession as other activities under Section 2(sa)(vi) of the Prevention of Money Laundering Act (PMLA), 2002 is a Reporting Entity under the law.

It said that due to Binance's ongoing provision of services to Indian clients and operations within India without adhering to its statutory obligations under the PMLA, a notice dated December 28, 2023, was issued to Binance under Section 13 of the Act.

The notice required Binance to demonstrate why appropriate action should not be undertaken against it for its dereliction of duties under the Act, despite its status as a Reporting Entity owing to its operations as a Virtual Digital Asset Service Provider (VDA-SP).

In response to the FIU's notice of December last year, the company made representations before Indian authorities. However, it failed to cut the ice with India's financial intelligence regulator.

FIU said: "After considering the written and oral submissions of Binance, the Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated."

"Consequently, the Director FIU-IND vide order dated 19th June, 2024 in exercise of powers under Section 13 PMLA, imposed a total penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only) on the Binance with reference to following violations committed by the Binance," it said in the statement.

The Financial Intelligence watchdog said Binance has been fined for contravention of Section 12(1), PMLA read with Rules 7(1), PML Rules. In addition, the FIU has also held that Binance was in contravention of Section 12(1), PMLA read with Rules 3(1)(D) and 7(3), and 8(2) Prevention of Money Laundering Rules.

The FIU-IND has also issued specific directions to Binance to ensure diligent compliance with its obligations outlined in Chapter IV of the Prevention of Money Laundering Act (PMLA) of 2002.

Binance will also have to comply with the PMLA Maintenance of Record Rules (PMLA Rules) of 2005 for the prevention of money laundering activities and combating the financing of terrorism (AMLCFT).

FIU's order covers Binance Investments Co Limited, which is based in Seychelles, and Binance Holdings Limited, based in the Cayman Islands and also covers Binance (Switzerland) AG, based in Zurich Switzerland.

The FIU said that the order of further compliance also covers any other entity carrying out activities in Indian jurisdiction with various URLS including binance.com.