By Jaspreet Kalra

MUMBAI (Reuters) -India's Financial Intelligence Unit (FIU) has imposed a fine of 188.2 million rupees ($2.25 million) on the world's largest crypto exchange, Binance, for operating in the country in violation of local anti-money laundering regulations.

India requires virtual digital asset service providers like crypto exchanges to be registered with the FIU as a reporting entity and comply with its anti-money laundering rules.

Binance did not immediately respond to an email seeking comment.

In May, Binance had registered with the FIU as the exchange sought to resume operations in the country after the watchdog issued show-cause notices to nine offshore exchanges operating in violation of local rules.

The watchdog had also asked the ministry of electronics and information technology to block online access to the exchanges.

Crypto exchange KuCoin had registered with FIU in March but faced a smaller penalty amount of 3.45 million rupees.

Canada's anti-money laundering agency had also imposed a fine of $4.38 million on Binance in May for violation of anti-money laundering rules.

Changpeng Zhao, the former chief executive of Binance, was sentenced to four months in prison in May by U.S. District Judge Richard Jones in Seattle after pleading guilty to violating the country's laws against money laundering.

($1 = 83.4970 Indian rupees)

(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)