The central government has issued notices to 25 offshore crypto service providers for violating the provisions of the Prevention of Money Laundering Act, 2002 (PMLA). The service providers have also been issued notices to take down their applications and websites for operating illegally.
“As part of recent part of compliance action against such entities, Financial Intelligence Unit India (FIU IND) has issued notices for non-compliance to the following 25 offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering (PML) Act, 2002,” the Ministry of Finance said in a release today.
“Further, the Director, Financial Intelligence Unit, in exercise of powers under Section 79(3)(b) of the Information Technology Act, 2000, has also issued notices to the aforesaid entities with respect to takedown of the application/URLs for public access which are operating illegally without complying with the relevant provisions of the PML Act, 2002 in India,” it said.
The government said that to date 50 VDA SPs have registered with FIU IND. “However, from time to time the entities which are catering to Indian users but not getting registered and thus remain outside the AML/CFT framework are identified by the FIU IND,” the ministry said.
Virtual Digital Assets Service Providers (VDA SPs) were brought into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act, 2002 in March 2023, according to the release.
The Virtual Digital Asset Service Providers (VDA SPs) operating in India (whether offshore or onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc. are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002.
“These obligations are activity-based and are not contingent on the physical presence of the entity in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND,” the release said.
The ministry warned that the crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
