India’s crypto companies made anti-money laundering commitments for the first time
India has added crypto to its anti-money laundering rules, making crypto exchanges, non-fungible token (NFT) marketplaces and custodial service providers legally responsible for monitoring suspicious financial activities.
The businesses must register with the Financial Intelligence Unit (FIU) and comply with other mandatory processes under the Prevention of Money Laundering Act (PMLA), the finance ministry said on Tuesday.
Although India does not have a regulatory body dedicated to crypto, this measure gives the FIU a significant role in overseeing crypto in the country. Until now, crypto businesses were not legally obligated to perform verification processes such as Know Your Customer (KYC). This is written into the law and thus becomes mandatory.
They will also have to report suspicious activities to the FIU voluntarily and must appoint a Money Laundering Reporting Officer (MLRO) to ensure compliance with the law.
“Crypto businesses will be required to have a customer due diligence and records management program in place and now they will have to maintain transaction records related to crypto business,” said Shashi Jha, a partner at Jigsaw Law. “Previously, there was no way. to submit suspicious transaction reports for these businesses. Now they can submit details of any suspicious activity to FIU-IND.”
As this year’s president of the Group of 20 industrialized nations, India has argued that no regulation is possible without global coordination. It recently steered the G-20 toward waiting for a global regulatory framework in the form of a synthesis paper drafted jointly by the Financial Stability Board and the International Monetary Fund, expected by September or October.
“Looks like VDA [virtual digital asset] service providers are now effectively categorized as ‘reporting entities’ under the PMLA,” said Sumit Gupta, co-founder and CEO of crypto exchange CoinDCX. “We have been voluntarily making these compliances for some time now, but glad to see that this has now been made into law .”
Bharat Web3 Association had requested that the industry be included in PMLA, Gupta said.
Indian authorities have already investigated several crypto exchanges as part of larger financial investigations under the PMLA.
UPDATE (March 8, 12:25 UTC): Adds citations in fifth, seventh paragraph, G-20 in sixth.
