Binance Likely To Resume India Operations As FIU-Registered Entity

SUMMARY

The cryptocurrency exchange plans to re-establish its presence in India as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry

Binance has committed to adhering to all relevant laws, including the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework

Last year, the government extended the scope of PMLA to include VDA platforms

banned by the Indian government in January, is looking to resume its operations in the country by paying a penalty of around $2 Mn.

The cryptocurrency exchange plans to re-establish its presence in India as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry, ET reported.

The FIU oversees trade in virtual digital assets (VDA). Binance has committed to follow all the relevant laws, including the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework, which it had been sloppily flouting until now.

Officials told ET that India’s position has consistently been transparent to all global cryptocurrency exchanges: adhere to all laws to maintain operations within India.

It is “unfortunate that it took (Binance) more than two years to realise there is no room for negotiations, and (that) no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities,” an official said as quoted in the report.

In December, the FIT of the Finance Ministry issued notices to nine overseas crypto platforms, including Binance and Kucoin, for not complying with provisions of the anti-money laundering laws.

The show cause notices were issued to the platforms for not registering as reporting entities with the FIU. The unit also wrote to the Ministry of Electronics and Information Technology (MeitY) to block the websites of the nine entities.

After Binance was delisted from the India app store, its website was blocked, the cryptocurrency exchange platform had been in talks with the government to regain access to its mobile app and website in the country.

It was reported earlier that while the platform was willing to pay taxes and penalties, it was not yet ready to comply with the Prevention of Money Laundering Act (PMLA) guidelines.

The government turned down Binance’s request to resume operations in India temporarily, insisting that the platform first implement processes to adhere to the country’s legislation, including PMLA.

Last year, the government extended the scope of PMLA to include VDA platforms. Since then, many prominent names like CoinDCX, WazirX, Coinswitch, and Zebpay, have registered with the FIU.

Both onshore and offshore cryptocurrency platforms must register with the FIU as ‘reporting entities’ and comply with PMLA, 2002. These regulations require crypto exchanges and VDA platforms to enforce know your customer (KYC) details for users, in addition to maintaining thorough account records and business correspondence with clients.