Government lists crypto under money laundering legislation

To fortify regulatory oversight over digital assets, the purview of the Prevention of Money Laundering Act has been broadened to include crypto trading, safekeeping along with concomitant financial activities, according to fresh reports. On Tuesday, the Union Finance ministry issued a gazette notification to get the ball rolling. Ensuring KYC of customers and platform users will henceforth be mandatory for crypto exchanges and ancillaries in the Virtual Digital Assets (VDA) sphere. Furthermore, exchanges will be required to inform the Financial Intelligence Unit India of suspicious activities.

The notification lists organisations dealing in VDA as “reporting entity” under PMLA-banks, with the ambit widened to further include financial institutions, companies involved in real estate and jewellery, and casinos. As per the new legislation, all reporting entities will have to mandatorily record every transaction. The government’s decision to bring the cryptocurrency domain under the scope of PMLA is abreast with the international trend of legislating digital-asset entities to uphold anti-money laundering standards as followed by other regulated institutions like banks or stock brokers.

A gazette notification released stated, “exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets (VDA), safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset” will now be under the purview of the Prevention of Money Laundering Act, 2002.

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