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News

India Warning Order For Crypto Exchanges Issued To Limit Money Laundering

December 28, 2023 - Around 2 mins mins to read

Key Points:

  • India issues compliance notices to offshore exchanges like Bittrex, enforcing the Prevention of Money Laundering Act and initiating steps to block illegal entities’ URLs.
  • The India warning order comes amid the country’s efforts to align the sector with traditional finance norms.
In a significant move, India’s Financial Intelligence Unit (FIU) has issued notices to the Union government, urging the blocking of access to nine overseas cryptocurrency exchanges.
India Warning Order For Crypto Exchanges Issued To Limit Money Laundering

Read more: India Will Establish Crypto Growth In Coming Months Following G20 Insights

India Warning Order to Crackdown on Offshore Crypto Exchanges

The India warning order, served under the Prevention of Money Laundering Act (PMLA), was issued due to the non-compliance of these exchanges, including Binance, Bittrex, Huobi, and MEXC Global, with regulations aimed at curbing money laundering.

The government has taken steps to block the URLs of these exchanges, which are allegedly operating illegally in India without adhering to PMLA provisions. The FIU, falling under the Finance Ministry, issued show cause notices to the entities, emphasizing that global crypto exchanges must comply with India’s anti-money laundering rules, regardless of their physical presence in the country.

India has been aligning its cryptocurrency regulations with traditional finance norms, mandating companies to collect know-your-customer (KYC) information and register with the FIU. While 31 entities are currently registered, offshore entities catering to Indian users were found operating outside the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) frameworks.

The FIU underscored the importance of compliance with AML and CFT rules, stating that global exchanges cannot evade guidelines simply because they lack a physical presence in India. Cryptocurrencies were brought under the anti-money laundering framework in March, with the government imposing a 30% tax on gains and a 1% deduction on each crypto transaction.

The India warning order comes as some Indian traders shift to global cryptocurrency platforms to potentially evade taxes, prompting stricter regulatory actions. The consequences for the non-compliant exchanges beyond URL blocking remain unclear at this point. 

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

AML

Binance

Bittrex

FIU

Huobi

India

MEXC Global

PMLA

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.