India’s Financial Watchdog Fines Binance $2.2 Million for Regulatory Lapses

June 20, 2024

India’s Financial Intelligence Unit (FIU) has imposed a fine of $2.2 million on cryptocurrency exchange giant Binance. The penalty stems from alleged non-compliance with anti-money laundering (AML) regulations.

The order, dated June 19, 2024, comes amid growing scrutiny of cryptocurrency exchanges in India. The FIU, responsible for safeguarding the financial system from money laundering and terror financing, had previously registered Binance in a landmark move for the country’s crypto industry. However, the registration process was contingent upon Binance’s adherence to AML and Know Your Customer (KYC) norms.

The FIU identified lapses in Binance’s onboarding procedures and transaction monitoring systems. These shortcomings potentially leave the platform vulnerable to misuse for illicit activities. The exact nature of the violations has not been officially disclosed.

Binance has not yet publicly commented on the fine. However, the company has faced similar regulatory hurdles in other countries. Recently, Canada’s financial intelligence agency, FINTRAC, penalized Binance $4.3 million for non-compliance with AML rules.

The FIU’s action against Binance underscores India’s evolving stance on cryptocurrencies. While the government has not imposed an outright ban, it has expressed concerns regarding potential financial risks and money laundering associated with digital assets. The Reserve Bank of India (RBI) has also maintained a cautious approach, advocating for a central bank digital currency (CBDC) as a potential alternative.

“CBDC can drive financial inclusion and provide a much safer alternative to private digital currencies, which, according to us, are potentially dangerous,” RBI Governor Shaktikanta Das said at the BIS Innovation Summit 2024.

The FIU’s fine on Binance is likely to be a key talking point in the ongoing discussions surrounding cryptocurrency regulation in India. It remains to be seen how Binance responds to the penalty and whether it will implement stricter compliance measures to regain the FIU’s confidence. The outcome will be closely watched by investors, industry participants, and regulators alike.

The Shib Daily has reached out to Binance for comment. The story will be updated if a response is received.

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