The Financial Intelligence Unit of India (FIU-IND) has levied a record penalty of $2.2 million on the global cryptocurrency exchange Binance.
This penalty, the highest ever imposed on any crypto entity in India, has been levied due to Binance’s violation of anti-money laundering (AML) regulations.
In December 2023, the Finance Ministry’s intelligence wing served a show cause notice to nine international exchanges including Binance for operating in India in violation of laws.
After careful scrutiny and upon perusing Binance’s responses and the FIU-IND submissions, the FIU-IND deemed the charges to be warranted and levied the stiff penalty on June 19, 2024.
Binance, which was declared unlawful by the Indian government in January, is now looking to re-enter by paying a fine of roughly $2 million. Before the ban, Binance was dominant in the Indian market, which is estimated to have 90% of the country’s $4 billion in crypto assets.
Binance’s massive $11 billion trading volume in the last 24 hours, reported by CoinMarketCap, highlights its global stature, although its dominant position in India stemmed from non-compliance with tax laws, allowing traders to bypass the 1% TDS on registered exchanges.
Even though the FIU-IND has been performing its functions within the legal frameworks as a VDA registrar, the tax factor continues to be under the observation of the Income Tax Department. This scrutiny will affect the investors who traded on the platform without authorization in the last two years.
The fine imposed on Binance raises concerns about increasing regulatory pressure in the crypto space and stresses that exchanges and their users should adhere to AML and tax laws.
Also Read: Binance Appeals $6M Fine by FINTRAC for AML Violations
