India fines crypto exchange Binance $2.25 million

India's Financial Intelligence Unit (FIU) has fined crypto exchange Binance 188.2 million rupees ($2.25 million) for providing services to Indian clients without complying with the country's anti-money laundering (AML) regulations.

On June 19, the agency announced , that the penalty relates to multiple violations of the Prevention of Money Laundering Act (PMLA) 2002.

Background of the case

As a digital asset service provider, Binance qualifies as a reporting entity (RU) under Section 2 of the PMLA. This statute requires the exchange to maintain and report transaction data and implement strict anti-money laundering measures.

However, an FIU investigation revealed that Binance failed to meet these obligations in serving Indian customers. As a result, regulators issued penalty notices to Binance and several other offshore crypto exchanges, banning them from operating in the country in January 2024.

In May, Binance and KuCoin became the first crypto-offshore structures to receive conditional approval from the FIU, under the pretext that they would pay a penalty after a hearing.

Violations and Regulatory Actions

The FIU announcement confirmed that the allegations against Binance were well-founded based on the director's written and oral statements. The exchange was cited for multiple violations, including failing to maintain and report transaction data, failing to provide required information to authorities and failing to maintain records as required.