India's Financial Intelligence Unit fines Binance $2.25 million for violating anti-money laundering laws. The cryptocurrency exchange faces regulatory challenges in multiple countries, including Nigeria. Previously dominating India's crypto market, Binance's non-compliance with local tax laws led to its ban in January 2024. Further tax investigations are expected.
In a significant development, India's Financial Intelligence Unit (FIU-IND) has levied a substantial fine of 188.2 million rupees (approximately $2.25 million) on Binance, one of the world's largest cryptocurrency exchanges. The penalty comes as a result of alleged non-compliance with India's anti-money laundering laws.
This action against Binance is part of a broader crackdown on cryptocurrency exchanges operating in India without adhering to local regulations. In December 2023, the FIU-IND issued notices to Binance and eight other international exchanges, accusing them of operating illegally in the country.
The FIU-IND claims that Binance violated three sections of India's Prevention of Money Laundering Act (PMLA) of 2002. Despite being a registered entity in India, Binance allegedly continued to provide services to Indian clients without fulfilling its statutory obligations under the PMLA.
This development comes at a time when Binance is facing scrutiny in other countries as well. In Nigeria, Binance executives are currently on trial, facing allegations of money laundering and tax evasion.
Before its ban in January 2024, Binance held a dominant position in India's cryptocurrency market, accounting for nearly 90% of the estimated $4 billion in crypto holdings of Indian nationals. The exchange's popularity was partly attributed to its non-compliance with local tax laws, allowing investors to trade without paying the mandatory 1% tax deducted at source.
The FIU-IND's penalty is just the beginning of Binance's regulatory troubles in India. The Income Tax department is expected to examine the tax implications for all investors who traded on the platform over the past two years.
This action against Binance underscores the growing global trend of increased regulatory scrutiny on cryptocurrency exchanges, as governments worldwide seek to bring the rapidly evolving crypto industry under their regulatory frameworks.
