The Financial Intelligence Unit in India (FIU-IND) has imposed a penalty of Rs 18.82 crore on the world’s largest crypto exchange Binance in an order on June 19.
This comes months after nine offshore exchanges in India were blocked for not registering and following local anti-money laundering regulations under the Prevention of Money Laundering Act (PMLA) 2002.
The latest notification said, “After considering the written and oral submissions of the Binance, Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated.”
It added that Binance had to pay a penalty of penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only). Further, Binance has been asked diligently comply with "Chapter IV of the PMLA 2002, in conjunction with the PMLA Maintenance of Record Rules (PMLA Rules) of 2005 for prevention of money laundering activities and combating the financing of terrorism (AMLCFT) to maintain records of all transactions."
Responding to the development, a Binance spokesperson said, ""We are aware of the FIU's order and are reviewing it now to determine next steps. We are grateful to have the opportunity to continue our mission to serve the vibrant Indian crypto community."
"We wish to work with the FIU as a reporting entity and we are enthusiastic about reentering the Indian market to contribute positively, should we be able to do so in the near future. We remain dedicated to maintaining transparency, fostering cooperation, and ensuring compliance with regulatory authorities," the spokesperson added.
Last month, Vivek Aggarwal, Director, FIU-IND and Additional Secretary Department of Revenue Government of India, had said that Binance had completed initial registration in the country and was being evaluated for further compliance proceedings.
Meanwhile, rival KuCoin got fully registered and became operational after paying a penalty fee of Rs 34.5 lakh. Among the offshore exchanges, KuCoin re-entered India in March, while OKX decided to discontinue its services in India from April 30.
Binance's India presence
Binance returning to India will be a bittersweet moment for local crypto exchanges, as they have been witnessing dwindling trading volumes over the past couple of years due to regulatory uncertainty, volatility of token prices and 30 percent tax imposed on income from crypto and 1 percent TDS (Tax Deducted at Source) added on every crypto transaction of Rs 10,000 in India.
This had led to users or retail investors move to locally unregistered global exchanges to evade taxes. Binance had benefited the most from this in terms of gaining users. But now by locally registering, exchanges like Binance and KuCoin too will fall under the purview of Indian regulations and investors will have to pay high taxes.
According to media reports, prior to blocking, Binance accounted for nearly 90 percent of the estimated $4 billion crypto holdings of Indian investors.
Globally, according to CoinGecko data, Binance cornered over 49.7 percent market share in the first quarter of 2024.
Blocking offshore exchanges
In December end, around nine offshore exchanges including KuCoin, Binance, OKX, Houbi among others were found to be not registered under FIU-IND and weren’t aligned with the provisions of the PMLA, 2002.
Following this, the government had ordered to block the URLs of these exchanges in India in January.
Even their apps were delisted from the Apple and Google’s app stores.
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