India Slaps Binance and 8 Other Crypto Platforms With Show Cause Notice for Non-compliance with Anti-money Laundering Law FIU has also suggested to the Ministry of Electronics and Information Technology to block the URLs of the nine entities

By Paromita Gupta

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The Financial Intelligence Unit India, under the Indian Finance Ministry, has issued compliance Show Cause Notices to nine offshore crypto platforms for alleged non-compliance with Indian anti-money laundering law.

The show cause notice has been issued against Virtual Digital Assets Service Providers such as Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The VDA SPs were brought under the confines of the 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.

FIU has also suggested to the Ministry of Electronics and Information Technology to block the URLs of the nine entities. "Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like the 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. The 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 PML Act which also includes registration with the FIU IND," the release also read.

At present, 31 VDA SPs are registered with FIU. While several offshore entities are catering to a substantial population of India, they have been avoiding getting registered and hence, fall outside the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

Back in September, 2018-founded Mudrex crypto startup announced it had successfully registered with the Financial Intelligence Unit (under Ministry Of Finance) in India. "The Government of India has always supported fostering innovation and promoting responsible growth within the crypto industry. Its proactive measures, including the implementation of taxation, inclusion of cryptocurrencies in anti-money laundering/counter-terrorist financing (AML/CTF) frameworks, and issuance of notices to non-FIU compliant foreign entities, show its commitment to ensuring a safe ecosystem for investors and businesses. This regulatory push by FIU provides investors an opportunity to transfer their assets from foreign exchanges to FIU-compliant entities in India. As India continues to position itself as a welcoming hub for crypto innovation, these moves collectively pave the way for a vibrant and sustainable future for the digital asset ecosystem," shared Edul Patel, CEO, Mudrex.

Paromita Gupta

Features Writer with Entrepreneur India

Covering news and trends in AI and Metaverse segments. An avid book reader running her personal blog on the side. You may reach me at paromita@entrepreneurindia.com. 

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