Comply With Anti-Money Laundering Norms: FIU-IND Director To Crypto Platforms

Financial Intelligence Unit-India’s (FIU-IND) director Vivek Aggarwal has yet again called on all offshore and onshore crypto exchanges operating in the country to comply with anti-money laundering laws. 

Addressing an event, Aggarwal underscored the need to curb misuse of cryptocurrencies for money laundering and financing terrorism. He reiterated that the anti-money laundering obligations were formulated with the “intent” to track and trace fraudulent activities effectively.

The director of the finance ministry’s unit also said that the norms for crypto exchanges are activity-based and not dependent on physical presence in India. As per the current rules, offshore platforms do not have to float a new subsidiary in the country but rather maintain a representative that the government can directly interact with.

Aggarwal made the comments while inaugurating a capacity building workshop for virtual digital asset service providers (VDASPs) registered as reporting entities under the Prevention of Money Laundering Act (PMLA). 

The workshop was attended by representatives from 35 crypto exchanges including Kucoin (back in India after months long ban), CoinDCX, CoinSwitch, Mudrex, Unocoin, WazirX, Pi42, and Giottus. In addition, the event also saw attendance from FIU-IND officials and industry body Bharat Web3 Association’s (BWA) representatives. 

In a statement, the BWA said that the workshop was organised to impart training on the compliance requirements and obligations for reporting entities and gather feedback on challenges faced by crypto exchanges. 

During the event, the BWA also unveiled a document that lists compliance requirements for registering as a reporting entity in the country and potential challenges faced while applying for such a certification with the Centre. 

“… Through our member firms, we aim to lead the way in AML/CFT compliance and share best practices within the sector… (BWA is) fully committed to working together to set standards for compliance practices, thereby creating a safer environment for the Web3 and VDA sector in India,” said Bharat Web3 Association chairperson Dilip Chenoy.

This comes close on the heels of reports saying that banned crypto exchange Binance is set to make its way back to India after receiving approval from the FIU to operate as a virtual asset service provider.

While Kucoin also made its entry back into the country after paying a penalty of INR 35.5 Lakh for past non-compliances with anti-money laundering provisions, authorities are reportedly still in the process of calculating the “quantum of liabilities” for Binance.

FIU is the nodal agency of the finance ministry that oversees coordination and strengthening of the government’s efforts against money laundering and financing of terrorism. 

Under the existing norms, all onshore and offshore cryptocurrency platforms operating in the country have to register as “reporting entities’ and comply with PMLA, 2002.  These entities have to compulsorily seek know your customer (KYC) details from customers and maintain account records and business correspondence with clients.