March 13, 2023
By Anjali Kochhar
The finance ministry of India has announced that cryptocurrency transactions would now come under the ambit of money laundering provisions.
In a notification, the government said that participation in transactions involving virtual digital assets would be under the Prevention of Money Laundering Act (PMLA). The move is the latest step taken by the government to tighten oversight of digital assets.
The ministry warned investors against “participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.”
Exchange and transfer of virtual digital assets would also fall under PMLA laws, the notification said.
CoinSwitch’s Ashish Singhal took to Twitter and said, “This will strengthen our collective efforts to prevent VDAs from being misused by bad actors.”
According to the Income tax act, ‘virtual digital asset’ refers to any information, code, number, or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise and can be called by whatever name.
The Enforcement Directorate, which has the mandate to investigate money laundering and forex violation cases, has already been probing crypto companies including exchanges CoinSwitch Kuber and WazirX.
The latest move by India aligns with a global trend of requiring digital-asset platforms “to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers,” said Jaideep Reddy, counsel at law firm Trilegal.
Dileep Seinberg, Founder and CEO, MuffinPay, Crypto Neobank, said, “This is a positive step towards the regulation of the cryptocurrency industry in India. Additionally, this guarantees that all cryptocurrency businesses must include necessary KYC, transaction monitoring, and so on in their processes. Following the enactment of the PMLA, cryptocurrency companies will now be required by law to perform enhanced due diligence.”
“Following PMLA guidelines, custodians, administrators, and VDA exchanges that handle customer funds are now required to report questionable transactions just like banks. In contrast, enforcement agencies could directly rely on this amendment in the absence of regulators. This initiative will strengthen our collaborative efforts to prevent malicious actors from abusing VDAs,” he told NFTMetta.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.