India’s anti-money laundering agency, the Enforcement Department (ED), is investigating the role that Binance Holdings Ltd. could have played in a money-laundering racket. The money laundering scheme involved Chinese betting apps that collected over $134 million and laundered a part of the money via the WazirX cryptocurrency exchange.
According to a Bloomberg report, the betting Apps allegedly used the cryptocurrency exchange that Binance acquired in 2019 over the past ten months to launder a part of the $134 million. The ED has found Binance guilty of failing to collect the requisite know-your-customer (KYC) details from most customers. Binance is currently facing a barrage of accusations amid worries that crooks are using cryptocurrencies to camouflage the proceeds of drug dealing, money laundering, and terrorism.
The exchange is also under the radar for not collecting detailed anti-money-laundering (AML) information as required by the Financial Action Task Force (FATF) for cryptocurrencies. ED has previously questioned WazirX for over $38 million on cryptocurrencies that the exchange transferred but couldn’t produce records. ED said in a Tweet:
This turn of events comes at a time when cryptocurrencies in India are gaining popularity. Still, the government is mulling a law prohibiting individuals holding cryptocurrencies in the country to create a framework for the Reserve Bank of India (RBI) to issue an official digital currency. Earlier this year, parliament listed the legislation for debate on the lower house official website. According to the publication, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 sought to:
“Create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
This attempt by India to restrict Cryptocurrency use is softer than an earlier one in April 2019 when the government had a complete ban on all cryptocurrencies. The authorities had suggested huge fines and a jail term of up to 10 years for anyone dealing with digital currencies. Only time will tell whether the government will eventually launch an official digital currency that will become a legal tender.