Indian Financial Intelligence Unit Issues Compliance Notices to Offshore Crypto Exchanges
India’s Financial Intelligence Unit (FIU), an agency responsible for monitoring and regulating suspicious financial activity, has issued compliance notices to nine offshore cryptocurrency exchanges. The FIU has also requested the Ministry of Electronics and Information Technology to block these exchanges’ websites in the country.
The affected exchanges include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. According to the FIU, these exchanges were operating illegally without complying with the provisions of India’s Prevention of Money Laundering Act.
The Notice and Requirements for Virtual Digital Asset Service Providers
“Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like 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 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 2002,” states the FIU.
The FIU emphasizes that this obligation is activity-based and not contingent on physical presence in India. It requires reporting, record-keeping, and other obligations on VDA SPs under the Prevention of Money Laundering Act, including registration with the FIU IND.
While 31 providers have registered with the agency, the FIU notes that offshore entities serving a significant number of Indian users have failed to register.
About the Author
MK Manoylov has been a reporter for The Block since 2020. With a graduate degree from New York University’s Science, Health, and Environmental Reporting Program (SHERP), MK has written extensively on various crypto topics. You can follow MK on Twitter @MManoylov and on LinkedIn.
Hot Take: Indian Government Cracks Down on Offshore Crypto Exchanges
The Indian Financial Intelligence Unit’s move to issue compliance notices and request the blocking of offshore cryptocurrency exchanges reflects the government’s efforts to regulate the crypto industry and combat money laundering. By requiring virtual digital asset service providers to register with the FIU and comply with obligations under the Prevention of Money Laundering Act, India aims to establish greater oversight and transparency in this sector.
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