Binance Must Follow PMLA Rules to Restart Operations

India cracks down on Binance and other crypto platforms for AML violations

Binance, one of the world's largest cryptocurrency platforms, has been asked by the Indian government to comply with the anti-money laundering rules to resume its operations in the country. Binance is among the nine offshore virtual digital assets service providers (VDA SPs) that have received show-cause notices from the Financial Intelligence Unit (FIU) for allegedly violating the Prevention of Money Laundering Act (PMLA) 2002.

The FIU is an intelligence agency under the finance ministry that monitors and reports suspicious financial transactions to the enforcement authorities. The PMLA requires VDA SPs to register with the FIU, report transactions exceeding Rs 10 lakh, conduct thorough know-your-customer (KYC) checks, and detect and prevent money laundering and terrorist financing activities.

Binance, along with other platforms like Kucoin, Huobi, OKX, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, have failed to comply with these obligations, despite catering to many Indian users. The FIU has also requested the Ministry of Electronics and Information Technology to block the websites and mobile apps of these entities.

Binance has reportedly sought interim relief from the government to resume its operations in India, but the government has rejected its plea, saying that it is not yet ready to comply with the PMLA guidelines. A Binance spokesperson said that the company has responded to the FIU and is committed to working with the regulators to ensure compliance.

Binance is facing regulatory scrutiny in several other countries as well, such as the UK, Thailand, Singapore, and the US, for operating without proper licenses and authorizations. The platform has also been accused of facilitating illicit activities, such as money laundering, tax evasion, and market manipulation, through its services.

The Indian government's action against Binance and other offshore platforms comes at a time when the country is preparing to introduce a bill to regulate cryptocurrencies and virtual digital assets. The bill is expected to provide a legal framework for the creation, issuance, and trading of such assets, as well as impose taxes and penalties for non-compliance.

The cryptocurrency industry in India has been growing rapidly, with over 10 crore users and over Rs 6 lakh crore worth of transactions. However, the industry also faces uncertainty and challenges due to the lack of clear regulations and the frequent changes in the government's stance on cryptocurrencies.

The industry has been urging the government to adopt a consultative and progressive approach towards regulating the sector and to recognize the potential benefits of cryptocurrencies and virtual digital assets for the economy and innovation.