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Binance, recognized as the world’s largest cryptocurrency exchange, is in trouble with Indian law. The nation’s anti-money laundering watchdog has fined it $2.2 billion for failing to comply with regulations while catering to its clientele.
Binance operates as a Virtual Digital Asset Service Provider (VDASP), which categorizes it as a Reporting Entity under the Prevention of Money Laundering Act (PMLA), 2002. Despite this designation, the crypto giant has been providing services within Indian borders without fulfilling its regulatory responsibilities.
Related: <a href="https://www.cryptopolitan.com/binance-guilty-plea-show-what-cryptos-about/" rel="noopener noreferrer nofollow">Does Binance Guilty Plea Show What Crypto’s Really About?</a>
On December 28, an official notice was served to Binance demanding an explanation for its non-compliance. The notice essentially challenged the exchange to justify why punitive measures should not be enforced against its operations.
After a thorough review of Binance’s written and oral defenses, the Director of the Financial Intelligence Unit (FIU-IND) <a href="https://fiuindia.gov.in/pdfs/judgements/Binance_Order_10_2024.pdf" rel="noopener noreferrer nofollow" target="_blank">justified</a> the charges based on ample evidence. This led to the imposition of a penalty under the powers granted by Section 13 of the PMLA.
The specifics of the contraventions include breaches of multiple sections of the PMLA and its corresponding rules, particularly concerning the obligations to maintain proper records and reports that aid in preventing money laundering and terrorist financing.
<figure class="wp-block-image size-large"><img fetchpriority="high" decoding="async" width="1200" height="800" src="https://www.cryptopolitan.com/wp-content/uploads/2024/06/image-174-1200x800.jpg" alt="Binance to pay $2.2b for violating India's AML rules" class="wp-image-543419" srcset="https://www.cryptopolitan.com/wp-content/uploads/2024/06/image-174-1200x800.jpg 1200w, https://www.cryptopolitan.com/wp-content/uploads/2024/06/image-174-300x200.jpg 300w, https://www.cryptopolitan.com/wp-content/uploads/2024/06/image-174-768x512.jpg 768w, https://www.cryptopolitan.com/wp-content/uploads/2024/06/image-174.jpg 1280w" sizes="(max-width: 1200px) 100vw, 1200px">
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 Richard Teng, CEO of Binance. Credits: Binance
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Moreover, Binance has been instructed to adhere strictly to Chapter IV of the PMLA, along with the PMLA Maintenance of Record Rules established in 2005. Just last week, the Orissa High Court decreed that cryptocurrency transactions are not illegal under Indian law.
This ruling came from a case involving a fraudulent Ponzi scheme, where Justice Sasikanta Mishra said that cryptocurrencies are neither recognized as money under the Prize Chits and Money Circulation Schemes (Banning) Act nor as deposits under the Odisha Protection of Interests of Depositors Act. Consequently, mere dealings in cryptocurrencies were declared not to constitute offenses under these statutes.
Jai Hamid

Binance to pay $2.2b for violating India’s AML rules

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