Indian Finance Ministry Cracks Down On THESE Crypto Exchanges For Alleged Violations

File Photo

New Delhi: In a recent development, the Financial Intelligence Unit (FIU) under the Indian Finance Ministry has taken a stern stance against nine offshore cryptocurrency exchanges, including major players like Binance and Kucoin. The FIU has issued a show cause notice, citing alleged non-compliance with Indian anti-money laundering laws.

The notice, sent under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA), revealed that these exchanges have been operating without proper authorization in India. ()

The nine crypto exchanges in question are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex. ()

Virtual Digital Asset Service Providers (VDA SPs), whether operating within or outside India, are required to register with the FIU India as 'Reporting Entities' if engaged in activities such as virtual digital asset-to-fiat currency exchanges, transfers, safekeeping, administration, or facilitating control over virtual digital assets. These entities must comply with the regulations outlined in the PMLA of 2002, which includes reporting, record-keeping, and other obligations.

According to the FIU notice, as of now, 31 VDA SPs have completed registration with FIU India. However, several offshore entities, despite serving a significant user base in India, have been avoiding registration, thus operating outside the purview of the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

The FIU India, as the primary national agency responsible for handling information related to suspicious financial transactions, plays a crucial role in sharing such information with enforcement agencies and foreign Financial Intelligence Units.

The FIU's move signifies a robust regulatory approach to ensure compliance within the cryptocurrency sector, emphasizing the need for adherence to anti-money laundering laws and frameworks. As a next step, the FIU has urged the Ministry of Electronics and Information Technology (MeitY) to block the URLs of these exchanges in India, intensifying efforts to curb illegal operations and protect the financial integrity of the country.