The Financial Intelligence Unit of India (FIU-IND) has imposed a fine of 188.2 million rupees ($2.25 million) on global cryptocurrency exchange, Binance for alleged non-compliance to anti-money laundering laws.
LEADERSHIP reports that Binance executives in Nigeria are currently on trial over allegations by the Economic and Financial Crimes Commission (EFCC) of laundering over $35 million through the exchange’s platform and facing tax evasion charges filed by the Federal Inland Revenue Service (FIRS).
In December 2023, the Finance Ministry’s intelligence unit responsible for overseeing virtual digital asset (VDA) trading, issued a ‘show cause notice’ to Binance and eight other international exchanges for operating in India without adhering to the relevant laws.
The Indian Authority said Binance as a registered entity in the country has violated three sections of the country’s Prevention of Money Laundering Act (PMLA), 2002.
In a notice dated 19 June, FIU said, “Due to Binance’s ongoing provision of services to Indian clients and operations within India without adhering to its statutory obligations under the PMLA, a notice dated December 28, 2023, was issued to Binance pursuant to Section 13 of the Act, compelling Binance to demonstrate why appropriate action should not be undertaken against it for its dereliction of duties under the Act, despite its status as a Reporting Entity owing to its operations as a Virtual Digital Asset Service Provider (VDA SP).
“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. Consequently, the Director FIU-IND vide order dated 19th June, 2024 in exercise of powers under Section 13 PMLA, imposed a total penalty of Rs. 18,82,00,000 (Rupees Eighteen Crore Eighty Two Lakh Only) on the Binance.”
Before it was banned in January this year, Binance accounted for nearly 90% of the estimated $4-billion crypto holdings of Indian nationals. The platform’s market dominance is mainly attributed to its non-compliance with tax laws, which allowed investors to trade without paying the 1% tax deducted at source (TDS) applicable on registered exchanges.
Despite the FIU imposing a penalty of Rs18.82 crore in its capacity as a VDA registrar, the Income Tax department will still examine the tax implications, impacting all investors who engaged in illegal trading on the Binance platform in the last two years.
