Background of the case: Binance operates as a Virtual Digital Asset Service Provider, which qualifies it as a reporting entity (RE) under Section 2 (as) (vi) of the PMLA.

This designation requires maintaining and reporting transaction records and ensuring that financial transactions are transparent.

On Thursday, June 19, the Financial Intelligence Unit (FIU) of India announced that the penalty applies to multiple violations of the Prevention of Money Laundering Act (PMLA), 2002.

The agency reviewed written and oral submissions from the Binance director and available company records before filing charges against the cryptocurrency exchange.

But when it came to serving Indian customers, FIU's investigation showed that Binance had broken these commitments. In January 2024, Indian officials banned Binance and several other offshore cryptocurrency exchanges from India for "operating illegally," issuing show-cause notices to them.

Along with KuCoin, Binance was the first overseas cryptocurrency-related organization to receive approval from the Financial Intelligence Unit in May. The approval was contingent to the payment of a fine following a FIU hearing.

Regulations and infractions

The FIU statement did, however, point out that the allegations against Binance were supported by the evidence in the file, taking into account the director's written and verbal testimony. A representative for Binance stated that the company is still examining the FIU's order and is not abandoning the Indian market.

In its penalties against Binance, the FIU lists several violations, such as failing to keep and submit transaction records, not providing authorities with the necessary information, and not keeping records for the requisite amount of time.

Regulatory penalties imposed by other nations

Binance was hit with an administrative monetary penalty of $4.4 million by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) in May for neglecting to register and disclose significant transactions involving digital assets.

The regulator claims that Binance neglected to register as a foreign money services provider and to disclose any transactions using digital currency that were worth more than $10,000.

However, due to accusations of violation with AML and Countering the Financing of Terrorism legislation, the bitcoin exchange filed an appeal against the FINTRAC director.

Two executives of Binance were taken into custody by Nigerian authorities in February after the company was accused of tax evasion and money laundering.