Money laundering using cryptocurrency
On 20 Jun 2024, India’s Financial Intelligence Unit (FIU) imposed fine of Rs 18.82 crore on cryptocurrency exchange Binance, for violating Anti-money laundering regulations.
FIU issued a show-cause notice in December 2023 to Binance, along with eight other offshore exchanges barring them exchange from operating in India, since they were found as part of FIU’s crackdown on offshore crypto exchanges operating in the country without registration.
Previously, the exchange has got itself registered with the FIU in May 2024 but it could resume operations only after paying a penalty for previous non-compliances, which was pending determination then. Apart from penalty, specific directions have also been issued to the Binance to ensure diligent compliance with obligations listed in Chapter IV of the Prevention of Money Laundering Act and rules.
Crypto exchange KuCoin which was also identified by FIU during crackdown, got fully registered and became operational after paying a fine of Rs 34.5 lakh.
Previously in April 2023, Ministry of Finance, through amendment has brought virtual digital asset businesses and service providers, under the scope of PMLA 2002.
PMLA was already applicable to banks, financial institutions and certain intermediaries in the securities and real estate markets. Bringing VDA (crypto dealers, exchanges, and intermediaries) in scope of PMLA, they are also mandated to perform Know Your Customer (KYC) checks, maintain records of clients and report any suspicious activity to FIU . These measures aim to enhance oversight of digital assets and prevent their misuse for money laundering and financing terrorism.