New Delhi: The Financial Intelligence Unit (FIU) has slapped a penalty of Rs 18.82 crore on the world’s largest crypto exchange Binance for alleged contravention of the country’s anti-money laundering law.
The federal agency issued an order Thursday charging the exchange with “dereliction of duty” being a Virtual Digital Asset Service Provider (VDASP) category of reporting entity under the Prevention of Money Laundering Act (PMLA).
India’s anti-money laundering law stipulates VDASPs to get registered as a reporting entity with the FIU and share timely suspicious transaction reports with it, which help the FIU to keep a check on financial crimes.
The summary order accessed by PTI said Binance was first issued a notice on December 28, 2023 as it operated in India and provided services to Indian clients.
Binance had earlier not registered as a reporting entity with the FIU, as required under the PMLA. It did it in May this year after the Union government banned its URLs in India and was issued a show cause notice, along with eight other crypto firms, by the FIU, a senior officer 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 on Binance…,” the order said.
The exchange has been charged under Section 12 (1) of the PMLA, which mandates a reporting entity to maintain a record of all transactions and timely furnish it to the FIU, along with accompanying rules stipulated under the anti-money laundering law.
A Binance spokesperson said they were aware of the FIU’s order and “reviewing it now to determine next steps”.
“We are grateful to have the opportunity to continue our mission to serve the vibrant Indian crypto community. We wish to work with the FIU as a reporting entity and we are enthusiastic about reentering the Indian market to contribute positively, should we be able to do so in the near future.
“We remain dedicated to maintaining transparency, fostering cooperation, and ensuring compliance with regulatory authorities,” the spokesperson said.
This is the second penalty order issued by the FIU against a crypto currency exchange or VDASP as it had issued a Rs 34.50 lakh worth penalty notice against KuCoin for similar contravention of the PMLA.
The order said the FIU has also issued “specific directions” to Binance for “ensuring diligent compliance with the obligations outlined in Chapter IV of the PMLA, in conjunction with the PMLA Maintenance of Record Rules (PMLA Rules) of 2005 for prevention of money laundering activities and combating the financing of terrorism”.
The penalty order has been issued against Binance setup in Seychelles, Cayman Islands, Switzerland and www.binance.com.
A crypto currency exchange is a digital marketplace that enables users to buy and sell crypto currencies like Bitcoin, Ethereum, and Tether.
Binance, launched in July 2017, said on its website that it was the largest crypto exchange by trade volume.
It has been in the investigation cross hairs of the Enforcement Directorate (ED) too, India’s other federal agency that implements the anti-money laundering law, as it froze funds worth crores of rupees kept in this exchange as part of various investigations.
