Apart from Binance and Kucoin, the other virtual digital assets service providers (VDA SP) who have been issued notice for not registering as reporting entities with the FIU-India are Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex.
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The virtual digital assets service providers operating in India (both offshore and 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 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 finance ministry said.
“As part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued compliance Show Cause Notices to following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA),” the ministry said in a statement.
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Under the I-T Act, reporting entities are required to file statements of financial transactions (SFT) with the tax department containing details of certain financial transactions or any reportable account maintained by them during the year. In March, the government had brought VDA SPs into the ambit of the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of PMLA.
Till date, 31 VDA SPs have registered with FIU IND.
However, several offshore entities catering to a substantial part of Indian users were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework, it added.
FIU-IND is the central, national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.
