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Crypto under PMLA: CoinDCX registers itself as reporting entity with FIU

As per the Prevention of Money Laundering Act (PMLA), 2002, a reporting entity is required to conduct KYC verification of the customers and maintain their records

cryptocurrency | cryptocurrencies | PMLA

Raghav Aggarwal  |  New Delhi 

Photo: Reuters

CoinDCX on Friday announced that it had registered itself as the "reporting entity" with the Ministry of Finance's (FIU). As per the Prevention of Act (PMLA), 2002, a reporting entity is required to conduct verification of the customers and maintain their records. If required, they also need to share records of suspicious transactions with the authorities.

"We welcome the government's move to include the VDA industry under the Prevention of Act, 2002 (PMLA). This will pave the road towards increased accountability and implementation of best practices by the VDA industry. As an exchange advocating for regulations and compliance, we are happy to be an FIU-registered reporting entity. As the industry continues to evolve, we will continue building trust and transparency, and focus on educating stakeholders to make VDA and Web3 safer and compliant," said Sumit Gupta, founder and chief executive officer (CEO) of CoinDCX.

Last week, the Centre brought under the ambit of the PMLA, 2002. According to the government notification, the exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets and the transfer of digital assets will be covered under laws.

The definition of "virtual assets" would include and non-fungible tokens.

Broadly, this means that any financial wrongdoing involving assets can now be investigated by the (ED). Additionally, the FIU-IND under the Department of Revenue will be responsible for receiving, processing, analysing, and disseminating the information relating to suspect financial transactions.

Speaking with Business Standard last week, Gupta said there is a need for clear regulations in the sector, and it would be better if countries come together and frame common global regulations.

"India having different regulations and the US having different will create regulatory arbitrage. This will not be good as this asset class is borderless," he said.

CoinDCX was also the first crypto exchange in India to publish its proof of reserves after the FTX fallout.

"CoinDCX will continue to work closely with the authorities to identify and address any potential risks associated with the use of VDAs in the future," the company said in a release on Friday.

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First Published: Fri, March 17 2023. 15:46 IST