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The Director of the Financial Intelligence Unit–India issued non-compliance notices to 15 Virtual Digital Asset Service Providers under Section 13 of the Prevention of Money Laundering Act, 2002.
The platforms were operating in India without meeting anti-money laundering and counter-terror-financing obligations, and their apps and website URLs have been sought to be taken down from public access.
Virtual Digital Asset Service Providers were brought under the PMLA framework as reporting entities in March 2023.
FIU-IND was set up in 2004 and reports directly to the Economic Intelligence Council, which is headed by the Union Finance Minister.
The action follows earlier enforcement against offshore exchanges, including the record penalty paid by Binance before it registered in India.
Empowers the Director, FIU-IND, to call for records, order an audit, issue a written warning and impose a monetary penalty on a reporting entity that fails to comply with its obligations. This is the provision under which the 15 notices were issued.
Casts the core duties on a reporting entity: maintaining records of prescribed transactions, verifying client identity and furnishing information to the Director.
Brought Virtual Digital Asset Service Providers — exchanges, custodians and transfer services — within the definition of reporting entity, making Indian and offshore platforms serving Indian users subject to AML/CFT compliance.
The route used to seek removal of the platforms' apps and URLs from public access once they were found to be operating unlawfully.
The fiscal side of the same regime: income from transfer of a virtual digital asset is taxed at 30 per cent, and a 1 per cent TDS applies to such transfers.
Central national agency set up in 2004 to receive, process, analyse and disseminate information on suspect financial transactions; maintains a national database and shares intelligence with domestic agencies, regulators and foreign FIUs
Apex body to which FIU-IND reports directly; coordinates economic intelligence and enforcement across agencies
Global standard-setter for AML/CFT whose recommendations underpin India's treatment of virtual asset service providers; India is a member
Administers the Information Technology Act, 2000, under which the app and URL takedowns are effected
Virtual Digital Asset Service Providers notified as reporting entities under the PMLA, 2002.
FIU-IND issues show-cause notices to nine offshore exchanges, including Binance, Kraken and KuCoin, and seeks blocking of their URLs.
Binance registers with FIU-IND after paying a penalty of Rs 18.82 crore; KuCoin also registers after paying a penalty.
FIU-IND imposes aggregate penalties of about Rs 28 crore on non-compliant platforms.
Show-cause notices issued to 25 offshore exchanges.
Non-compliance notices issued to 15 offshore VDA SPs under Section 13 of the PMLA, with takedown of their apps and URLs sought.
General Awareness > Financial regulators, AML/KYC framework, digital assets
GS Paper III > Money laundering and its prevention; Indian economy and regulatory institutions
Under the PMLA, an entity — bank, financial institution, intermediary or designated business — obliged to verify client identity, maintain transaction records and report to FIU-IND. VDA service providers were added to this list in March 2023.
A platform that exchanges, transfers, safekeeps or administers virtual digital assets, or provides financial services relating to their issue and sale.
Anti-Money Laundering and Countering the Financing of Terrorism — the compliance framework built on FATF recommendations and implemented in India through the PMLA.