Offshore Crypto Platforms Binance, Kucoin Among 9 Facing Action for AML Law Violations

The Financial Intelligence Unit (FIU) under the Finance Ministry of India has taken action against nine offshore cryptocurrency and virtual digital assets platforms for non-compliance with the country's anti-money laundering (AML) law. These platforms include prominent names such as Binance and Kucoin.

Show Cause Notices Issued

The FIU has issued show cause notices to these entities, requiring them to explain why they have not registered as reporting entities with the FIU-India. Failure to comply with the Prevention of Money Laundering Act (PMLA) 2002 could result in further action, including blocking of their URLs in India.

Virtual Digital Assets Service Providers Under Scrutiny

The virtual digital assets service providers (VDA SPs) that have received notices include Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex, in addition to Binance and Kucoin. These platforms are required to register with the FIU-India and comply with the obligations set forth under the PMLA.

Registration and Compliance Obligations

VDA SPs operating in India, both offshore and onshore, must register with the FIU-India as reporting entities. This requirement applies to entities involved in activities such as exchanging virtual digital assets for fiat currencies, transferring virtual digital assets, and providing safekeeping or administration services for virtual digital assets.

Reporting and Record-Keeping Obligations

The PMLA imposes reporting, record-keeping, and other obligations on VDA SPs. These obligations include registration with the FIU-India, filing statements of financial transactions with the tax department, and maintaining records of certain financial transactions.

Government Action Against Offshore Entities

The FIU-India has taken action against offshore entities that cater to a substantial portion of Indian users but have failed to register and comply with the AML and Counter Financing of Terrorism (CFT) framework under the PMLA.

FIU-India's Role

The FIU-India serves as the central national agency responsible for receiving, processing, analyzing, and disseminating information related to suspect financial transactions to enforcement agencies and foreign FIUs.

The Indian government's actions against offshore cryptocurrency platforms highlight its commitment to combating money laundering and terrorist financing risks associated with virtual digital assets. By enforcing compliance with the PMLA, the government aims to bring these platforms under the regulatory framework and ensure transparency and accountability in the virtual digital assets sector.