The Financial Intelligence Unit (FIU), that comes under the Indian Finance Ministry has issued a show cause notice to 9 offshore crypto exchanges, and has asked the Ministry of Electronics and Information Technology (MeitY) to block their URLs in India. The action has been taken for alleged non-compliance with Indian anti-money laundering law. As per the notice sent out by FIU, these 9 crypto exchanges, which includes Binance and Kucoin, have been operating illegally in India. The nine exchanges that have received the show cause notice include, Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex.
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“As part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued compliance Show Cause Notices to following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA),” the show cause notice reads.
Virtual digital asset service providers, whether operating within or outside India, involved in activities such as virtual digital asset-to-fiat currency exchanges, virtual digital asset transfers, safekeeping or administration of virtual digital assets, or facilitating control over virtual digital assets, must register with FIU India as a 'Reporting Entity.' They are obligated to adhere to the stipulated requirements mandated under the Prevention of Money Laundering Act (PMLA) of 2002.
“The regulation casts reporting, record keeping, and other obligations on the Virtual Digital Asset Service Providers (VDA SPs) under the PML Act which also includes registration with the FIU India,” the notice further reads.
As per the notice by FIU, as of now, 31 VDA SPs have completed registration with FIU India. Nonetheless, a number of offshore entities, despite serving a significant portion of Indian users, have been avoiding registration and thus falling outside the purview of the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
The FIU India serves as the primary national agency tasked with everything from receiving, processing, analysing, to sharing information concerning suspicious financial transactions with enforcement agencies and foreign Financial Intelligence Units.
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