The Financial Intelligence Unit (FIU), an entity operating within the Finance Ministry, has reportedly issued show-cause notices to nine offshore platforms dealing in cryptocurrencies and virtual digital assets. Notable names among these entities include Binance, Kucoin, Huobi, and Kraken, as per PTI.
The notices were served due to alleged non-compliance with anti-money laundering (AML) laws applicable in the country.
Moreover, the FIU hasn't solely limited its actions to issuing notices; it has taken an additional step by reaching out to the Ministry of Electronics and Information Technology, urging them to block the URLs associated with these platforms.
The nine platforms are accused of operating in contravention of the provisions stipulated in the Prevention of Money Laundering Act (PMLA) within India.
Besides Binance and Kucoin, the other virtual digital assets service providers (VDA SP) receiving these notices include Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex.
The ministry issued a statement explaining the action taken by the Financial Intelligence Unit India (FIU IND), which included sending compliance Show Cause Notices to these offshore virtual digital assets service providers under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA).
The primary issue revolves around these platforms not registering as reporting entities with FIU-India, a requisite for virtual digital assets service providers operating in India, regardless of their physical presence in the country.
The activities mandating registration encompass the exchange between virtual digital assets and fiat currencies, the transfer of virtual digital assets, and the custody or management of virtual digital assets.
This compliance action by the FIU involves issuing Show Cause Notices under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA), which imposes reporting, recordkeeping, and other obligations on virtual digital assets service providers, including the obligation to register with FIU-India.
The move follows the government's decision in March to bring virtual digital assets service providers within the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework, broadening the regulatory scope.
Despite 31 VDA SPs registering with FIU IND, this recent action targets offshore entities allegedly failing to adhere to the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework, despite catering to a significant portion of the Indian user base.
As the central national agency overseeing suspicious financial transactions, FIU-IND plays a critical role in enforcing AML and CFT measures.
