India's Financial Intelligence Unit (FIU), which falls under the purview of the Ministry of Finance has issued show-cause notices to 9 offshore cryptocurrency platforms, like Binance and Kucoin, under the stringent Prevention of Money Laundering Act (PMLA). The FIU has also written to the Ministry of Electronics and Information Technology to block the URLs of these nine entities that are operating illegally without complying with the provisions of the PML Act in India.

In addition to Binance and Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex are among the other virtual digital assets service providers (VDA SP) who have received notices for not registering as reporting entities with the FIU.

“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),” a statement released by the finance ministry said.

The FIU-IND directly reports to the Economic Intelligence Council (EIC), which is led by the Union finance minister. “Director FIU IND has written to secretary, ministry of electronics and information technology [MeitY] to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India,” the statement said.

Digital asset service providers, whether they operate within or outside India, engaging in activities such as converting digital assets to traditional currencies, transferring digital assets, safeguarding or managing digital assets, or utilizing instruments that confer control over digital assets, are required to undergo registration with the Financial Intelligence Unit India (FIU IND) as a 'Reporting Entity.' Furthermore, they are mandated to comply with a defined set of responsibilities as outlined in the Prevention of Money Laundering Act (PMLA) of 2002.

Moreover, the ‘Reporting Entity’ must file statements of financial transactions (SFT) with the Income Tax department disclosing certain financial transactions or any reportable account maintained by them during the year.

In March, the government brought VDA SPs into the ambit of the Anti-Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of PMLA. To date, 31 VDA SPs have registered with FIU IND.

However, several offshore entities catering to a substantial part of Indian users were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework, it added.

Image source: Hindustan Times