December 29, 2023
By Tsering Namgyal
The Indian government has issued show cause notices to nine offshore crypto exchanges under Prevention of Money Laundering Act (PMLA), it announced on Thursday.
Finance Intelligence Unit (FIU) said it has written to the Ministry of Electronics and Information Technology to block the url of offshore exchanges Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, Bitfinex.
FIU, which comes under the Ministry of Finance, said the exchanges are operating illegally without complying with the Indian money laundering law – PMLA.
Virtual Digital Assets Service Providers (VDA SPs) were brought into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of PML Act, 2002 in March 2023, it said.
Crypto exchanges, operating in India (both offshore and onshore) are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of PMLA, the announcement said.
In March, India’s Finance Ministry mandated that crypto businesses will have to register with the FIU, the country’s anti-money laundering unit, and comply with other processes under the PMLA. This meant crypto businesses became legally obligated to perform verification processes such as Know Your Customer (KYC).
“Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India,” it said.
“The obligation is activity-based and is not contingent on physical presence in India,” it said.
Till date 31 crypto exchanges have registered with FIU IND. However, several offshore entities though catering to a substantial part of Indian users were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework, it said.
About the author
Tsering Namgyal is the chief content officer of NFTMetta.com.
