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Financial Intelligence Unit issues compliance show-cause notices to nine VDA Service Providers

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The Financial Intelligence Unit India (FIU IND), as part of compliance action against offshore entities, has issued compliance show-cause notices to nine offshore Virtual Digital Assets Service Providers (VDA SPs), under Section-13 of the Prevention of Money Laundering Act, 2002 (PMLA).

Virtual Digital Assets Service Providers (VDA SPs) were included into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework, under the PMLA provisions, in March 2023. The offshore VDA SPs which have been served notices are Binance (Binance Investments Co. Ltd, Binance Holdings Ltd, Binance (Switzerland) AG); Kucoin (Mek Global Limited, Phoenixfin Pte. Ltd); Huobi (Sinohope Technology Holdings Ltd, Huobi Global Limited); Kraken (Payward Trading Ltd).

Others in the list are Gate Technology Incorporated, Bittrex Inc, Bitstamp, MEXC Global, and Bitfinex (iFinex Inc, BFXWW Inc).

The FIU IND Director has written to the Secretary, Ministry of Electronics and Information Technology, to block the URLs of all these entities that are operating illegally without complying with the provisions of the PML Act in India.

Virtual Digital Asset Service Providers, operating in India, both offshore and onshore, 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 the Prevention of Money Laundering Act (PMLA), 2002.

This obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PMLA, which also includes registration with the FIU IND.

31 VDA SPs have registered with FIU IND till now. However, several offshore entities, though catering to a substantial part of Indian users, were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

Sonakshi Datta
Sonakshi Datta
Journalist who wants to cover the truth which others look the other way from.

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