Offshore Crypto Exchanges Falls Under AML/CFT Guidelines: Ministry of Finance

28 virtual digital assets and cryptocurrency service providers have been formally registered by India's Financial Intelligence Unit (FIU-IND).

In a bid to fortify regulatory compliance within India’s cryptocurrency landscape, the Ministry of Finance (MoF) delivered a significant update on December 4, 2023, mandating offshore Crypto Exchanges catering to the Indian market to register with the Financial Intelligence Unit-India (FIU-IND). 

This proactive measure aligns with the government’s persistent efforts to curb potential illicit activities and ensure accountability within the realm of virtual digital asset service providers (VDA SPs).

MoF Announces Major Update for Offshore Crypto Exchanges

Responding to queries raised by Andhra Pradesh MP Lavu Sri Krishna Devarayalu in Lok Sabha, the Ministry of Finance (MoF) released a significant declaration on December 4, 2023. This declaration marks a seminal shift in the regulatory framework governing offshore cryptocurrency exchanges operating within the Indian market. 

Pankaj Chaudhary, MoS in the Finance Ministry, provided clarity on the government’s stance, elucidating that offshore crypto exchanges catering to the Indian market are obligated to register with the Financial Intelligence Unit-India (FIU-IND).

Offshore Crypto Exchanges under FIU-IND

Chaudhary’s elucidation emphasized the gravity of the guidelines and reporting requisites applicable to these offshore entities. The initiation of the registration process for Virtual Digital Assets Service Providers (VDA SPs) signifies the government’s resolute commitment to imposing stringent regulatory measures in the evolving landscape of virtual assets.

Furthermore, Chaudhary highlighted the enforcement aspect, affirming that any non-compliance with the regulations under the Prevention of Money Laundering Act (PMLA) would result in the initiation of appropriate actions by the authorities.

Apart from that, the ministry also provided a list of 28 VDA SPs of Indian origin who are listed under the FIU-IND. Some of the major exchanges that have registered so far include Angellic Infotech Pvt. Ltd. (SunCrypto), Neblio Technologies Private Limited (Coin DCX), Awlencan Innovations India Ltd (Zebpay), Zanmai Labs Pvt Ltd (WazirX), and Bitcipher Labs LLP (Coinswitch).

Understanding the Financial Intelligence Unit of India (FIU-IND)

The Financial Intelligence Unit-India (FIU-IND) stands as a cornerstone institution in India’s financial regulatory landscape, entrusted with a crucial mandate of monitoring, analyzing, and regulating financial transactions to combat money laundering, terrorist financing, and other financial crimes.

FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister and serves as the country’s primary agency responsible for gathering, collating, analyzing, and disseminating information related to suspicious financial transactions. Its primary objective revolves around strengthening the efforts to curb illicit financial activities.

FIU-IND operates as a centralized repository for receiving and analyzing Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs) from various reporting entities, including banks, financial institutions, and now, virtual digital asset service providers (VDA SPs). These reports aid in identifying potential instances of money laundering, terrorist financing, or other unlawful activities within the financial ecosystem.

By mandating VDA SPs, including offshore cryptocurrency exchanges catering to the Indian market, to register with FIU-IND as reporting entities, the government reinforces its commitment to enhancing oversight and regulatory compliance within the rapidly evolving landscape of digital assets.

The role of FIU-IND extends beyond mere surveillance; it acts as a crucial catalyst in fostering collaboration between national and international agencies, thereby bolstering India’s stance in the global fight against financial crimes. 

SunCrypto Listed as Reporting Entity under FIU-IND

Among the notable offshore crypto exchanges complying with the stringent regulations set forth by the MoF and FIU-IND, SunCrypto has emerged as a commendable example by successfully registering itself as a reporting entity

This landmark achievement not only underscores SunCrypto’s dedication to regulatory compliance but also symbolizes a crucial milestone in India’s pursuit of a transparent and regulated cryptocurrency landscape.

Umesh Kumar, the visionary founder of SunCrypto, expressed profound satisfaction at the exchange’s inclusion as a reporting entity under FIU-IND. In a statement, Kumar reiterated SunCrypto’s unwavering commitment to adhering to regulatory protocols and ensuring transparency in its operations. 

Umesh Kumar SunCrypto

SunCrypto’s recognition as a reporting entity under FIU-IND not only amplifies the exchange’s credibility but also sets a benchmark for other offshore platforms catering to the Indian market. This development signifies a pivotal step towards establishing a robust framework for overseeing cryptocurrency exchanges.

Conclusion

The recent mandate imposed by the Ministry of Finance signifies a pivotal stride towards bolstering transparency and accountability within India’s cryptocurrency landscape. 

The insistence on registration with FIU-IND for offshore crypto exchanges servicing the Indian market underscores the government’s commitment to mitigating potential risks associated with unregulated financial activities. With notable entities stepping forward to comply, this move is poised to pave the way for a more regulated and secure crypto ecosystem in the country.

To learn more about regulations followed by Offshore Crypto Exchanges in India, go check out SunCrypto Academy.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. All content provided is for informational purposes only, and shall not be relied upon as financial/investment advice. Opinions shared, if any, are only shared for information and education purposes. Although the best efforts have been made to ensure all information is accurate and up to date, occasionally unintended errors or misprints may occur. We recommend you do your own research or consult an expert before making any investment decision. You may write to us at [email protected].

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