FIU IND act against virtual asset providers
Context:
- Recently the Financial Intelligence Unit India (FIU IND) issued showcause notices to nearly nine offshore virtual digital asset service providers (VDA SPs).
- They include Binance, Kucoin, Huobi, Bitfinex and MEXC Global, among others.
- The notice is for operating illegally without complying with the necessary provisions of the Prevention of Money Laundering Act, 2002 (PMLA).
- Apart from the notice, FIU-IND has also been written to the Secretary of the MEITY to block URLs of the mentioned VDA SPs.
Provisions and context of non-compliance:
- Last year in March 2023, the so called Virtual Digital Asset Service Providers (VDA SPs) in India were brought under the Anti-Money laundering/counter financing of terrorism regulations.
- The service providers were mandated to comply with PMLA 2002.
- They need to verify the identities of onboarded clients, and also to maintain the records of their financial positions and suspicious transactions.
- This mandate applies to all VDA SPs operating in India irrespective of their physical presence.
The purpose behind the non-compliance:
- The main motive is to enable monitoring and tracking of financial transactions and also to curb money laundering and terror financing.
- It also takes care of the concern that any regulator about the purported anonymity of the crypto assets and their potential use for unlawful purposes.
- It is also important to note that the mandatory KYC verifications would ensure lack of anonymity and businesses not encountering multiple hurdles.
- This compliance is in line with India’s efforts through the G20 where it has been advocating for global regulation of cryptocurrency.
About FIU IND:
- It is an organisation which comes under the Department of Revenue, Government of India.
- It collects financial intelligence about offences under the Prevention of Money Laundering Act, 2002.
- It reports directly to the Economic Intelligence Council (EIC) and is headed by the Finance Minister.
