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Financial Intelligence Unit UPSC NOTE

 FIU Overview

  • The Financial Intelligence Unit (FIU) sent a notice to cryptocurrency exchange Binance for “operating illegally” in India through an offshore entity. 

  • Notices have been sent to the firm in the Seychelles, Cayman Islands, and Switzerland

  • The other cryptocurrency firms to which notices have been sent are Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

  • The FIU comes under the Finance Ministry’s Department of Revenue.

FIU Functions

  • FIU acts as a central hub for receiving and analyzing reports of suspicious financial transactions from various reporting entities, including banks, financial institutions, and designated non-financial businesses and professions (DNFBPs).

  • Analysts examining financial data on multiple screens, looking for patterns and connections.

  • FIU analysts meticulously scrutinize these reports for indications of potential money laundering, terrorist financing, tax evasion, corruption, or other financial crimes.

  • Dissemination of Information to Law Enforcement.

  • A network of arrows connecting the FIU to various law enforcement agencies.

  • If suspicious activity is detected, the FIU shares relevant information with law enforcement agencies for further investigation and potential prosecution.

  • A world map with FIUs in different countries interconnected.

  • FIUs collaborate and share information with their counterparts in other countries to combat cross-border financial crimes and track illicit financial flows that transcend national boundaries.


When it comes to finance, "Binance" has two primary roles:

1. Crypto Exchange:

  • Largest trading volume: Binance Exchange is the world's largest cryptocurrency exchange by trading volume, allowing users to buy, sell, and trade hundreds of cryptocurrencies, including Bitcoin, Ethereum, and various altcoins.

  • Wide range of trading options: Beyond basic spot trading, Binance offers margin trading, futures trading, and options trading, cater to diverse trading strategies and risk appetites.

  • Liquidity and competitive fees: Binance attracts high trading volume, which often translates to greater liquidity and potentially better execution prices for users. It also boasts competitive fee structures for trading and other services.

2. Financial Ecosystem:

  • Binance Coin (BNB): The native token of the Binance ecosystem, BNB, holds financial value within the platform. Users can hold BNB to receive discounts on trading fees, participate in governance voting, and access exclusive features and services.

  • Decentralized Finance (DeFi): Binance supports various DeFi applications built on its own blockchain platforms, Binance Chain and BNB Chain. These dApps facilitate lending, borrowing, staking, and other financial services without relying on traditional intermediaries.

  • Fiat gateway: Binance allows users to deposit and withdraw funds using fiat currencies (e.g., USD, EUR) through various payment methods. This bridges the gap between traditional finance and the crypto world.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Financial Intelligence Unit UPSC NOTE
Financial Intelligence Unit UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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