Crypto Under Lockdown: India’s AML Beast Roars

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In the gray dawn of a bustling land, the machinery of rule tightens its grip. The FIU-IND, that distant clerk of doom, now treats every sour note of digital gold as a report to be filed, every whisper of virtual flame bound by the big seal of PMLA. Selfish privacy fades; the gaze of the state is everywhere, and the ledger grows heavier with each keystroke. Ah, the modern crowd-bold with dreams, obedient to forms-and the tax of it all? A joke with a bite. 😅🤖

  • The FIU-IND has declared all VASP platforms serving Indian users as reporting entities under the Prevention of Money Laundering Act.
  • Exchanges must dawn the mask of selfie‑KYC, capture their riders’ geolocation, perform penny‑drop checks, and beg for extra IDs, then file Suspicious Transaction Reports to FIU-IND.
  • Mixers, tumblers, privacy tokens and some ICO/ITO activity are all banished to the ash heap; non‑compliant platforms face fines and the long, cold stare of criminal liability. The FIU has already pressed 28 crore rupees into the pot of penalties.

So the country tightens its grip, and the crypto market sighs, not with relief but with the breath of a tired crowd. The sector is now under the watchful eye of the anti‑money‑laundering framework, dictated from the halls where papers pile up and decisions become louder than voices.

India continues to push ahead with cryptocurrency legislation

The Financial Intelligence Unit, operating under the Ministry of Finance, has branded every virtual digital asset service provider as a “reporting entity” under the Prevention of Money Laundering Act, 2002. The designation took effect after a notification on March 7, 2023. A bureaucratic march, sure, but with a rhythm that makes the crowd murmur, “Are we safe or just observed?” 😂

Crypto exchanges, wallet providers, and related platforms, whether rooted in India or perched offshore, now wear the same uniform of compliance as banks and other regulated institutions. The new framework decrees that all virtual digital asset service providers must register with FIU-IND to legally operate in the country. If they dodge registration, the state will chase them with enforcement actions, fines, and the possibility of criminal liability. Centralized exchanges, custodial wallets, and offshore platforms catering to Indian users are all in the line of sight.

The guidelines broaden know‑your‑customer requirements. Exchanges must implement live selfie verification to prove real presence and to spot deepfakes through movement checks. Platforms must also capture geo‑location data at account creation, including IP address, date, and time. Bank verification is required through a “penny‑drop” ritual, and users must present an additional government ID along with their PAN. The grand theatre of checks continues, with the audience growing restless. 🕵️‍♂️

Transactions involving anonymity‑enhancing tools-privacy tokens, tumblers, or mixers-are forbidden. Exchanges are barred from enabling such acts. Enhanced due diligence is required for high‑risk clients, including individuals from jurisdictions on FATF black or grey lists, Politically Exposed Persons, and certain non‑profits. The shadow of risk is long, and the light of disclosure longer still. 😶‍🌫️

Crypto platforms must retain customer identities and transaction records for at least five years, or longer if an investigation lingers. Suspicious Transaction Reports must be filed with FIU-IND when required, woven into the fabric of regulatory life.

The Enforcement Directorate holds the purse and the hammer, with penalties amounting to 28 crore rupees in the 2024‑25 fiscal year for non‑compliance, according to official figures. A cold reminder that, in this era, calculation and consequence walk hand in hand through every market’s alley. 💼💥

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2026-01-12 16:58