The world’s largest crypto exchange, Binance, has been penalized a fine by the Financial Intelligence Unit (FIU) in India for noncompliance with the prescribed guidelines. FIU has placed a fine of $2.25 million on its account for its negligence in the anti-money laundering rules.

This fine comes after Binance officially filed in May to resume its operations in India . This filing was done after Binance was sanctioned by the FIU in December 2023. Eight other offshore exchanges violating local regulations, included KuCoin, Huobi, Kraken, Gate, Bittrex, Bitstamp, MEXC Global and Bitfinex, were sanctioned by FIU in December.

In January, the government directed the blocking of access to these exchanges in India, and their applications were removed from Google and Apple stores.

Services that deal with virtual digital assets have to report to FIU as the ‘reporting entity’ and are legally bound to follow the laws and measures under the Prevention of Money Laundering Act (PMLA), 2002 regulations.

The FIU had earlier blocked the bank on KuCoin in March after levying a fine of Rs 34. 5 lakh.

On the other hand, the former chief executive of Binance, Changpeng Zhao was arrested for four months for having been found guilty of violating the US laws against money laundering at the largestcryptocurrency exchange earlier this year.

At the same time, in May, a competing cryptocurrency platform KuCoin was completely registered and started its operations after settling a fine of Rs 34.5 lakh.

Upon reviewing both the written and spoken arguments from Binance, the Director of FIU-IND, concluded that the allegations against Binance were proven to be true.

"As a result, the Director FIU-IND, through a decree dated June 19, 2024, exercised its authority under Section 13 PMLA to impose a penalty of Rs. 18,82,00,000 on Binance," said the decree.

The crypto exchange platform, Bianance, was found to have violated Section 12 (1) of the PMLA, which requires a reporting entity to keep a record of all transactions to provide it to the FIU.

The directive noted that the Financial Intelligence Unit has also issued "specific instructions" to Binance, "to guarantee careful adherence to the commitments detailed in Chapter IV of the PMLA, while also following the PMLA Rules from 2005 for the purpose of preventing money laundering and fighting the support of terrorist financing."

Note that , until December 2023, the Financial Intelligence Unit had reportedly registered a total of 31 crypto exchanges in India.