Indian Finance Ministry Cracks Down on Offshore Crypto Exchanges for Non-Compliance
The Financial Intelligence Unit (FIU) under the Indian Finance Ministry has recently issued a show cause notice to nine offshore cryptocurrency exchanges, urging the Ministry of Electronics and Information Technology (MeitY) to block their URLs within India. The notice has been served on the grounds of alleged non-compliance with Indian anti-money laundering laws. The FIU has identified these nine exchanges, including prominent names like Binance and Kucoin, as operating illegally in India.
In accordance with Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA), FIU IND has initiated compliance actions against these offshore Virtual Digital Assets Service Providers (VDA SPs). The exchanges in question, Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex, are obligated to respond to the show cause notices.
The notice emphasizes that virtual digital asset service providers, whether functioning within or outside India, engaged in activities like virtual digital asset-to-fiat currency exchanges, transfers, safekeeping, administration of virtual digital assets, or enabling control over them, must register with FIU India as a 'Reporting Entity.' Compliance with the stipulated requirements outlined in the PMLA of 2002 is mandatory for these entities.
“The regulation imposes reporting, record-keeping, and other obligations on the Virtual Digital Asset Service Providers (VDA SPs) under the PML Act, which also includes registration with the FIU India,” states the notice.
According to FIU, as of now, 31 VDA SPs have completed registration with FIU India. However, despite serving a substantial portion of Indian users, several offshore entities have evaded registration, placing themselves outside the scope of the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
The FIU India functions as the primary national agency responsible for tasks ranging from receiving, processing, analyzing, to sharing information related to suspicious financial transactions with enforcement agencies and foreign Financial Intelligence Units.