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India's Financial Intelligence Unit (FIU-IND) has issued notices to 25 offshore cryptocurrency exchanges for failing to comply with the country's anti-money laundering regulations. These platforms, which cater to Indian users, have been operating without the necessary registration under the Prevention of Money Laundering Act (PMLA), 2002. The government is taking action to bring these virtual digital asset service providers under the purview of Indian financial laws, aiming to curb illicit activities and protect investors.
Key Takeaways
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25 offshore crypto exchanges have received notices from FIU-IND.
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The non-compliance is related to the Prevention of Money Laundering Act (PMLA), 2002.
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These exchanges were serving Indian users without registering as reporting entities.
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The government has directed the blocking of their applications and URLs in India.
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Several major global exchanges are among those targeted.
Regulatory Action and Non-Compliance
The FIU-IND has initiated action against these 25 Virtual Digital Asset Service Providers (VDA SPs) under Section 13 of the PMLA. The core issue is their failure to register with FIU-IND, a mandatory requirement for any entity providing virtual digital asset services to Indian users, regardless of their physical location. This registration is crucial for adhering to anti-money laundering and counter-financing of terrorism (AML-CFT) frameworks.
Targeted Exchanges and Government Directives
Among the prominent exchanges facing scrutiny are Huione, Paxful, CEX.IO, LBank, BingX, CoinEx, Poloniex, and BitMex. The FIU-IND has not only issued notices but has also directed the blocking of these platforms' applications and websites within India, utilizing provisions of the Information Technology Act, 2000. This move aims to prevent Indian users from accessing services from non-compliant offshore entities.
Registration and Obligations
While 50 VDA service providers have already registered with FIU-IND, the agency continues to identify and address offshore firms operating in the Indian market without proper authorization. The obligations for registered entities include record-keeping, transaction monitoring, and customer verification. The finance ministry has emphasized that these requirements are activity-based and not dependent on the physical presence of the entity in India.
Risks Associated with Unregulated Crypto
The Indian finance ministry has also issued a general warning regarding the inherent risks associated with crypto products and non-fungible tokens (NFTs), noting that they are largely unregulated and can lead to significant losses with limited regulatory recourse for investors. This crackdown is part of a broader effort by India to strengthen its regulatory oversight of the digital asset space.
Sources
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FIU-IND issues notices to 25 offshore crypto exchanges, The Economic Times.
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25 offshore crypto exchanges face govt action, including Huione, CEX.IO, BingX, The Economic Times.
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FIU issues notices to 25 offshore crypto firms over PMLA non-compliance, Mint.
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India cracks down on 25 crypto exchanges including BingX, LBank, CoinW over compliance failures, TechCrunch.
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