FinMin sends notices to offshore crypto exchanges, asks Meity to block them

The finance ministry has issued showcause notices to nine offshore virtual digital assets (VDA) service providers dealing with crypto assets and has requested the Ministry of Electronics and Information Technology (Meity) to block their websites. These websites are operating illegally, not complying with the Prevention of Money Laundering (PML) Act provisions. The platforms include Binance, the largest cryptocurrency exchange, alongside Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

VDA service providers were included in the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the PML Act, 2002, in March 2023.

"Director FIU IND (Financial Intelligence Unit-India) has written to the Secretary, Ministry of Electronics and Information Technology, to block the URLs of these entities. They are operating illegally without complying with the PML Act provisions in India," the finance ministry stated.

FIU-IND is the national agency responsible for receiving, processing, analysing, and disseminating information related to suspect financial transactions to enforcement agencies and foreign FIUs. Both offshore and onshore VDA service providers operating in India, engaged in activities like exchanges between VDAs and fiat currencies, transfers of VDAs, and the safekeeping or administration of VDAs or instruments enabling control over VDAs, are required to register with FIU IND as Reporting Entities. They must comply with obligations mandated under the PML Act. This obligation is activity-based and is not contingent on physical presence in India.

"Till date, 31 VDA SPs have registered with FIU IND. However, several offshore entities catering to a substantial part of Indian users were not registering and coming under the AML/CFT framework," the finance ministry added.