Binance Struggle In India, As Country’s Financial Watchdog Imposes Fine

India has imposed a substantial penalty on Binance for non-compliance with local laws. This recent incident adds to the rising hurdles faced by Binance abroad as governments strengthen monitoring of cryptocurrency operations.

The Indian government, through the Financial Intelligence Unit (FIU) ), has issued a fine on Binance. The fine is part of a larger initiative by Indian authorities to strengthen regulation of the cryptocurrency industry, which has expanded quickly in recent times but is still rife with legal ambiguities.

The FIU also stated that after careful consideration of both oral and written evidence by Binance, which the commission said was based on available material records, it discovered that the charges against the company were viable. FIU has announced that the director has ordered that a penalty of $2.2 million be imposed on the company for going against an existing law.

It has been revealed that the exchange did not notify authorities of any questionable transactions as required by AML legislation. Concerns have been expressed regarding the platform’s capacity to stop unlawful activity due to this lack of compliance.

Binance Expresses Dissatisfaction Over Indian Government’s Actions, Says It’s Unnecessary 

Binance has voiced dissatisfaction over the penalties and promised to address the regulatory issues brought up by the Indian authorities. The company has been working hard to improve its compliance procedures and has already achieved great strides.

Binance, in its response, stated, “We take compliance very seriously and are committed to working alongside regulators around the world to ensure our platform meets the highest standards.” The statement also added that regulation-related problems are common for Binance, as evidenced by this instance in India. The UK’s Financial Conduct Authority (FCA) banned Binance from conducting regulated activities in 2021, citing the exchange’s failure to adhere to AML requirements.

The United States Commodity Futures Trading Commission (CFTC) has been investigating Binance for permitting Americans to trade derivatives without registering with the agency. These regulators have raised several concerns, from working without proper licenses to failing to implement strong consumer protection measures.

Bharat Web3 Association Comments, Advises On the Need For Compliance 

The director also instructed that the correct procedure should be taken to ensure compliance. The office of the Bharat Web3 Association, Dilip Chenoy, while commenting on the development, advised other companies to comply with the country’s financial laws to curb the assessment of money laundering, terrorism financing and related offences in the country.

Because of the industry’s explosive expansion and the slow pace of regulatory changes, exchanges are forced to adjust to new regulations constantly. Following the news, the value of Binance’s native cryptocurrency, BNB, sharply dropped, raising investor fears about the exchange’s ongoing regulatory issues.

An industry analyst Michael Carter suggests that, “To foster confidence and guarantee the long-term viability of the cryptocurrency market, regulatory supervision is imperative.” In India, all cryptocurrency and digital assets companies are expected to register under the FIU and adhere to all the anti-money laundering guidelines stipulated in its financial regulation laws. 

India’s FIU Issues Statement Explains Binance’s Regulatory Violation 

According to an Indian government, through the Financial Intelligence Unit (FIU) document with a titled code number 10/DIR/FIU-IND/2024, and dated June 19, 2024, explicitly stated that the company was fined for going contrary to its anti-money laundering regulations.

The statement also stated that because of Binance’s current provision of cryptocurrency services to the Indian public and its free operations in the country without due diligence hence, contradicting the PMLA, a formal Notice was issued to Binance on December 28, 2023.

The notice has contained reasons for a request to the company as to why the right actions should not be taken against it for violating the clause under the Act despite identifying as a reporting entity and operating as a virtual digital asset service provider (VDA SP). 

Meanwhile, Binance exchange, in May 2024, registered with the FIU and planned to commence operation after the FIU issued them and nine other offshore cryptocurrency exchanges a formal notice claiming they’d violated the country’s rules.