Indian FIU takes action against major VDA SPs for persistent non-compliance with anti-money laundering laws. On the back of the Reserve Bank of India (RBI) continuing to distrust digital currencies and equating them with “gambling”, the nation’s ministry of finance stepped into the fray to further penalise disingenuous businesses belonging to the sector, carrying out their operations in India.
On 28th December 2023, the Indian Financial Intelligence Unit (FIU) hauled up several well-known Virtual Digital Assets Service Providers (VDA SPs) for their continued non-compliance with the country’s laws pertaining to anti-money-laundering. In addition, the Financial Intelligence Unit (FIU) also sent a formal application to the Electronics and Information Technology Ministry asking the latter to block the sites of these VDA SPs.
The biggest name among these VDA SPs flouting the Indian laws is that of Binance. The other eight companies are Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, Bitstamp and Kucoin. In its complaint addressed to the Secretary of the aforementioned ministry, the Financial Intelligence Unit (FIU) has stated that the operational activities of these companies are essentially illegal in nature due to their continued non-compliant nature of functioning.
Back in March 2023, VDA SPs were included in India’s Prevention of Money Laundering (PML) Act. The Act itself was introduced over two decades ago, in 2002. Categorising further, these VDA SPs have become a part of the PML Act’s framework of Anti-Money-Laundering/ Counter Financing of Terrorism (AML-CFT).
In its press release listing the names of these companies that won’t be allowed to operate anymore in India, the Ministry of Finance, under which the Financial Intelligence Unit (FIU) operates, shared details about the companies that needed to register themselves under the PML Act.
“Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like the exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002. The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND.”
The press release also noted that up to now a total of 31 VDA SPs have registered themselves under the said Act.
