India Warns Offshore Crypto Exchanges Flouting Regulations

India’s anti-money laundering agency, the Financial Intelligence Unit (FIU-IND), has issued legal notices to 9 offshore cryptocurrency platforms violating domestic regulations.

Bringing Crypto into the AML Ambit

In March 2022, India mandated all Virtual Digital Asset Service Providers (VDA SPs) like crypto exchanges to register with FIU-IND under prevention of money laundering laws. This requires them to fulfill reporting, record-keeping and compliance obligations.

So far, 31 exchanges have registered. But many foreign entities catering to Indian users weren’t registering despite the location-agnostic, activity-based rules.

Cracking Down on Violators

The FIU-IND has now sent legal notices under the Prevention of Money Laundering Act demanding explanations from 9 unnamed offshore crypto companies.

It also requested the IT Ministry to block their website access in India for defying laws.

Aimed at Safeguarding Users

India allows functioning of regulated crypto platforms to curb use of uncontrolled channels. Rules make exchanges monitor client activity and report high-risk transactions.

By enforcing compliance, authorities seek to safeguard Indian users from poor oversight and abuse on such platforms.

It also aims to check unlawful inflows from Indian investors into unregulated vehicles notorious for money laundering or terror financing.

Priority on User Protection

India has adopted a calibrated approach – neither banning crypto nor letting it grow unchecked.

Ensuring exchanges have strong controls remains a policy priority to mitigate financial crime risks the assets could pose if left unregulated.

By compelling international platforms to follow Indian AML-rules for local users, regulators are trying to balance innovation with user security.

Month: Current Affairs - December, 2023

Category: Economy & Banking Current Affairs • India Nation & States Current Affairs