Nearly 3,300 Crypto Accounts Under Scanner For Involvement In Illegal Activities

India’s Financial Intelligence Unit (FIU) reportedly tracked 3,300 cryptocurrency accounts suspected of being used in illegal activities such as money laundering and drug trafficking, among others, during the last eight months.

According to an ET report, the FIU has shared information about these accounts with other law enforcement agencies and crypto exchanges, both in India and abroad. The agency has recommended that these accounts be closed. India has also reached out to the Egmont Group, an international group of financial intelligence units of 166 countries, to shut some of these accounts.

The report cited a senior official as saying that the agency tracked about 3,300 crypto accounts associated with illicit activities between April and November 2022. The list of the accounts was also shared with the Enforcement Directorate, the Income Tax Department and the Central Bureau of Investigation, the official added.

Around 70% of these accounts have been blocked, the report added. The official said that the rest of the accounts are either beyond Indian jurisdiction or are being closed at the moment. For instance, crypto exchange WazirX said in its transparency report last month that it closed 764 accounts based on requests from Indian law enforcement agencies.

The crypto accounts in question were linked to drug trafficking, money laundering, child pornography and wildlife smuggling, with many transactions dating back to 2019, the official was cited as saying. 

For instance, between 2019 and 2021, the FIU detected illegal drug-related crypto transactions worth INR 28,000 Cr. Some of these transactions were found to be deposits made into the accounts of people associated with civil unrest.

The move comes as India continues to lobby at global forums for regulating and monitoring cryptocurrency. India has said on global forums that cryptocurrency is being used to fund illicit activities and a stricter international set of laws would help curb the menace. 

Finance Minister Nirmala Sitharaman has been the most vocal Indian minister, voicing the country’s concerns at multiple forums, including the G20.

In September, during a visit to the US, Sitharaman urged the International Monetary Fund (IMF) to take the lead in bringing global crypto regulations. During the visit, she also batted for global crypto regulations in her address at the IMF. 

Before that, the finance minister asked the G20 nations to bring non-financial assets such as crypto under the purview of the automatic exchange of information among countries.

India, which is among the largest crypto markets in the world, has a strict taxation regime for crypto assets, with a 30% tax on all gains made on crypto assets and a 1% TDS on each crypto transaction above INR 10,000.

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