Binance, the world's largest cryptocurrency exchange, has been slapped with a hefty fine of 188.2 million rupees ($2.25 million) by India's Financial Intelligence Unit (FIU) for non-compliance with local anti-money laundering (AML) regulations. This is the highest ever fine imposed on any crypto entity for non-compliance with AML laws in India.

Binance's AML Lapses

The FIU cited several key violations, including:

1. Lack of Principal Officer Details: Binance failed to provide the required details of its principal officer to the FIU.

2. No Mechanism to Detect Suspicious Transactions: The exchange did not have a mechanism in place to detect suspicious transactions.

3. Failure to Inform FIU of Suspicious Transactions: Binance did not inform the FIU of any suspicious transactions.

Binance Registers with FIU After Show-Cause Notice

In an effort to resume operations in India, Binance registered with the FIU in May after receiving show-cause notices from the watchdog. This move came after the FIU issued show-cause notices to nine offshore exchanges found to be operating in violation of local regulations. As part of its crackdown, the FIU also recommended that the Ministry of Electronics and Information Technology block online access to these exchanges.

Global Regulatory Scrutiny

This is not the first instance of a cryptocurrency exchange facing penalties for AML violations in India. In March, KuCoin, another major crypto exchange, registered with the FIU and was fined a smaller amount of 3.45 million rupees for similar infractions.

Binance has faced regulatory scrutiny globally. In May, Canada's anti-money laundering agency imposed a hefty fine of $4.38 million on the exchange for breaches of AML regulations. Additionally, Changpeng Zhao, Binance's former CEO, was sentenced to four months in prison by U.S. District Judge Richard Jones in Seattle after pleading guilty to violating American AML laws.

A Wake-Up Call for Crypto Exchanges

The fine serves as a wake-up call for crypto exchanges to prioritize compliance with AML regulations. As the global regulatory landscape continues to evolve, exchanges must adapt to ensure the integrity and security of their operations.