John Isige
India is now the latest country to enforce anti-money laundering regulations on the cryptocurrency sector amid increased oversight of the industry on a global scale.
This new raft of rules targeted crypto trading custody services and other related financial activities, according to a notice sent out on Tuesday by the Finance Ministry.
India Aligns With Global Anti-Money Laundering Standards
The steps being undertaken by India appear to be aligning with a global regulatory movement to ensure all digital asset platforms work within anti-money laundering canons used in the traditional financial sector.
Jaideep Reddy, an advocate at law firm Trilegal, reckons that India’s goal is to ensure digital asset service providers adhere to set “anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.”
India is not new to extreme laws and blanket bans that often severely impact the local crypto landscape, with its influence felt on a global scale at times.
The crypto community in the country last year suffered a tremendous blow when India enacted a stringent tax regime on the digital asset sector.
The rules sailed through despite a public outcry, including efforts by lobbyists.
The crypto community is currently required to pay a levy on trading activities and domestic trading volumes plunged massively in India owing to this move and a year-long rout in crypto prices.
DNA, a local news publication explained that “the Indian government aims to curb illegal activities such as money laundering and other financial crimes while ensuring transparency and accountability in the crypto sector.”
Some companies are already at loggerheads with the government as the country’s Enforcement Directory goes after them for alleged money laundering and other forex violation incidences.
WazirX and CoinSwitch Probed
Firms currently being probed are crypto exchanges WazirX and CoinSwitch – WazirX is an Indian-based cryptocurrency trading platform that was apparently acquired by Binance in 2019.
However, the exact details regarding the deal were never made public, a situation that led to confusion about who really owns the Indian crypto exchange.
Binance distanced itself from WazirX in 2022 when Indian authorities stormed the firm’s offices with money laundering allegations.
The largest exchange in the world by daily traded volume maintains the acquisition was based on “lin and intellectual property,” CoinDesk reported in January 2023.
The Ministry of Finance’s notice mentions activities that must abide by the imposed anti-money laundering guidelines – including an exchange between virtual digital assets and fiat currencies, an exchange between crypto assets like Bitcoin and Ethereum, and sending and receiving of digital assets.
Platforms providing custody services for digital assets, which encompass the “administration of virtual digital assets or instruments enabling control over virtual digital assets; and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset” are all required to fall in line.
“The notification classifies entities dealing in VDA as “reporting entities” under PMLA, which means that they will be required to maintain a record of all transactions, including cash transactions exceeding INR 10 lakh, for at least five years,” DNA explained in detail.
India’s love-hate relationship with crypto has been reflected by the latest anti-money laundering rules “is concerning, as implementing the requisite compliance measures is likely to require time and resources,” Reddy outlined.
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This article was written for Business 2 Community by John Isige.
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