By George Ward
The world’s largest crypto exchange, Binance, has been penalized by the Financial Intelligence Unit (FIU) over an alleged violation of India’s Prevention of Money Laundering Act (PMLA). India’s regulatory body initially issued Binance a notice on December 2023, requesting the exchange to explain why the authorities should not take action against it.
Penalty from FIU-IND
In response to ongoing regulatory scrutiny, Binance registered with the Financial Intelligence Unit (FIU) in May and offered oral and written defenses of its operations. Despite these efforts, on June 19, complaints were filed against the exchange, resulting in significant penalties.
When Binance was found to have violated numerous provisions of the PMLA, the Director of the Financial Intelligence Unit of India (FIU-IND) imposed a fine of Rs.18,82,000,000 (approximately $2.25 million). Notably, Binance has previously been fined for anti-money laundering (AML) offenses by other regulators, and this case highlights a long-standing pattern.
Ongoing Regulatory Issues Across Borders
Last month, Canada’s Financial Transactions and Reports Analysis Center (FINTRAC) fined the famous cryptocurrency exchange for $4.3 million. This occurred around five months after the exchange reached a financial deal in the United States over AML and sanctions violations totaling $4.3 billion.
Changpeng Zhao (CZ), the founder of Binance, recently filed a guilty plea to multiple counts and agreed to pay a fine of $50 million as part of the settlement. CZ is detained at California Prison Lompoc II, serving a four-month sentence. Moreover, Binance.US is finding it increasingly difficult to operate in the US.
The Department of Financial Institutions (DFI) of North Dakota recently revoked its license to operate as a money transmitter, citing violations of the state’s money transmitter rules and noncompliance with municipal legislation. Lise Kruse, the DFI’s commissioner, cited Changpeng Zhao’s conviction for AML activities as a key reason for their decision. As a result, Binance.US updated its list of states it no longer supports to include North Dakota, reflecting the company’s increasing number of regulatory difficulties.
Increased Regulatory Scrutiny in the US
Binance.US’s regulatory issues extend beyond North Dakota. The exchange is also having problems with many other US state regulators. The Florida Office of Financial Regulation announced an emergency suspension of the firm’s operations last November, citing an “immediate danger” to the general public.
Other states, including Oregon, Alaska, Maine, and North Carolina, have taken similar steps to restrict Binance.US’s operations or refuse to renew the company’s operational license. As a result, the exchange no longer operates in more than ten states across the country, and it cannot accept new users in several places.
The repeated obstacles Binance faces in various jurisdictions are a cause for concern and could make or mar the public’s trust in the platform and hamper its market competitiveness in the long run.