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Government sends notice to 9 offshore crypto firms for PMLA non-compliance

The financial watchdog has also asked the Ministry of Electronics and Information Technology to block URLs of the nine entities for operating “illegally” in the country without adhering to regulatory norms.
Last Updated : 28 December 2023, 18:21 IST
Last Updated : 28 December 2023, 18:21 IST

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Bengaluru: Show cause notices have been sent to nine crypto or virtual digital asset (VDA) service providers operating from overseas by the Financial Intelligence Unit for not complying with the provisions of the Prevention of Money Laundering Act (PMLA) in India, as per a press statement.

The financial watchdog has also asked the Ministry of Electronics and Information Technology to block URLs of the nine entities for operating “illegally” in the country without adhering to regulatory norms.

VDA service providers were brought under the ambit of PMLA in March of 2023 by the Finance Ministry, which requires them to register with the FIU as a reporting entity and comply with the obligations listed under the act like following KYC-norms, reporting suspicious transactions and record keeping, which are based on the company’s activities and doesn’t require physical presence in the country.

The companies that have been sent the show causes notices by the FIU include Binance, Bittrex, Kucoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global and Bitfinex, all of which are among the top crypto service providers worldwide. The FIU noted that 31 crypto service providers had already registered themselves with the regulatory body, but a number of offshore entities had failed to do so.

Many of these offshore exchanges conduct global operations from tax havens like the Cayman or British Virgin Islands and have been a preferred destination for Indian crypto traders that don't want to pay the 1per cent tax-deducted at source that is charged on every VDA transaction in India, leading to a bulk of India’s crypto trading volumes to move from domestic exchanges to these platforms.

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Published 28 December 2023, 18:21 IST

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