FIU issues notices to 25 offshore crypto firms over PMLA non-compliance
FIU-India has issued notices to 25 offshore VDA firms for failing to comply with anti-money laundering laws, warning of penalties, audits, and potential takedown of illegal platforms.
The Financial Intelligence Unit of India (FIU-IND) has issued notices to 25 offshore virtual digital asset (VDA) service providers for alleged non-compliance with India’s anti-money laundering law, the finance ministry said in a statement on Wednesday.
The notices were issued under Section 13 of the Prevention of Money Laundering Act (PMLA), which empowers authorities to initiate enquiries, seek audits of records, verify client identities, and demand reports on suspicious transactions. Entities found in violation face penalties of up to ₹1 lakh per breach.
Illegal operations flagged
The ministry added that the Director of FIU-IND has also issued notices under the Information Technology Act, 2000, seeking takedown of apps and URLs that were operating illegally without PMLA compliance in India.
FIU-India, set up in 2004, is the central agency responsible for processing, analyzing, and disseminating information related to suspicious financial transactions.
So far, 50 VDA service providers have registered with FIU-IND. However, the agency continues to flag offshore entities catering to Indian users without registration, keeping them outside the anti-money laundering and counter-financing of terrorism (AML-CFT) framework.
VDA service providers operating in India (whether offshore or onshore) and 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 entities and also comply with the obligations under PMLA, the ministry said.
High-risk warning
These obligations are activity-based and are not contingent on physical presence of the entity in India. The regulation casts reporting, record keeping, and other obligations on the VDA service providers which also includes registration with the FIU IND, the ministry said.
“It must be mentioned that the crypto products and non-fungible tokens (NFTs) are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions,” it added.