Crypto, virtual assets to come under money laundering provisions

The finance ministry has notified that crypto or virtual asset businesses will now be in the ambit of the Prevention of Money Laundering Act, 2002 (PMLA) and Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).

"Participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset... For the purposes of this notification 'virtual digital asset' shall have the same meaning assigned to it in Clause (47A) of Section 2 of the Income-Tax Act, 1961 (43 of 1961)," said a gazette paper of issued by the Government of India.

Sharat Chandra, Co-Founder India Blockchain Forum said that this notification is a great step towards compliance. "It mandates entities dealing in crypto to follow KYC, anti-money laundering regulations and due diligence as followed by banking and other financial entities which fall under the classification of reporting entities under PMLA," he said.

"Slowly but surely, we are moving towards a regulated crypto ecosystem! Entities such as CoinDCX are now required by law to conduct due diligence and enhanced due diligence under the PMLA," said Sumit Gupta, Co-Founder and CEO of CoinDCX, a crypto exchange.