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Over 3,000 crypto accounts under scrutiny for ‘illegal activities’

India’s Financial Intelligence Unit (FIU) tracked 3,300 crypto accounts in the last eight months that it suspected were being used for money laundering, drug trafficking and other illegal activities, including funding social unrest. The agency has shared the information with other enforcement agencies and crypto exchanges, both in India and overseas.

FIU has recommended closure of these accounts and has also reached out to international agencies.

India is a member of the Egmont Group, an international group of financial intelligence units of 166 countries.

“In last few months (April to November) we have tracked about 3,300 accounts, associated with various illegal activities,” a senior official said, adding that the list had been shared with the Enforcement Directorate, the Income Tax Department and the Central Bureau of Investigation.
The enforcement agencies have already raised requests for closure of the crypto accounts in cases where they were local and operating on India-based crypto exchanges.

Enforcement Agencies’ Synergy

The official added that the majority of transactions by these accounts were linked to drug trafficking, money laundering, child pornography and wildlife smuggling, with many going back to 2019.

Three digital asset management companies are under the scanner and a detailed probe helped trace some of these accounts.

Between 2019 and 2021, FIU detected illicit cryptocurrency-facilitated drug transactions worth Rs 28,000 crore.

The official added that FIU also discovered transactions where cryptocurrency deposits were made into accounts of people identified with social unrest and agitation. “Increasing use of crypto in financing social unrest is a matter of concern,” said the official. “Most of them are using the dark web for such transactions. However, use of technology and synergy between enforcement agencies are helping them to block such transactions.”

The official said 70% of these accounts are already blocked and the rest are either in the process of being closed, or they are beyond the jurisdiction of Indian law enforcement agencies.

“Cases where exchanges are in foreign jurisdiction, enforcement agencies are also working closely with international agencies and they have flagged the request to international agencies, including Interpol, Eurasian Group, Egmont (the Egmont Group of FIUs) and Europol,” the official said.

Cryptocurrency exchange platform WazirX last week said it had blocked over 700 accounts between April and September, based on directives from law enforcement agencies and internal assessments of alleged irregularities.

Last month, India hosted the third ‘No Money for Terror’ Ministerial Conference, which reviewed new technologies used in terror financing and preventive measures. New Delhi suggested a permanent secretariat could be set up to sustain the continued global focus on countering the financing of terrorism.

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