Digital Asset Management Services Under ED, IT Dept Scanner For INR 28K Cr Worth Transactions

Following an alert by the Financial Intelligence Unit (FIU), three digital asset management companies have come under the scanner of the Enforcement Directorate (ED) and the income tax (IT) department.

The companies have come under scrutiny for their alleged roles in illicit drug transactions worth INR 28,000 Cr, Economic Times reported.

For the buying and selling of drugs, digital currency was used, while some of these companies facilitated it. The agency has been able to track transactions worth INR 28,000 Cr, a source said as quoted in the report. In addition, the transactions were not reported to authorities.

To find out if there is a money laundering aspect, detailed findings have been sent to the ED. Along with that, the findings have been sent to the IT department as well to probe tax evasion by the entities involved.

About 200 transactions were carried out using digital currencies in the British Virgin Islands, the Cayman Islands, and Nigeria, all routed via Indian exchanges and the transactions were conducted between 2019-2021.

How India Looks At Digital Currencies

Earlier this month also, the Reserve Bank of India (RBI) reiterated its stance that cryptocurrencies undermine India’s financial and macroeconomic stability. When it comes to private digital currencies, the central bank always spoke about risks related to money laundering and financing of terrorism.

“These digital assets (cryptocurrencies) undermine India’s financial and macroeconomic stability because of their negative consequences for the financial sector…Further, a wider proliferation of cryptocurrencies has the potential to diminish monetary authorities’ potential to determine and regulate monetary policy and the monetary system of the country which could pose (a) serious challenge to the stability of the financial system of the country,” the RBI said.

As RBI is gearing up for the launch of central bank digital currency (CBDC), the bank stated that it will be designed with in-built mechanisms for anti-money laundering and combating financing of terrorism.