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The Union Finance Ministry said in a gazette notification that the Prevention of Money Laundering Act, 2022 has been implemented for crypto transactions, holdings and related financial services. In such a case, Indian crypto exchanges will have to report suspicious activities to the Financial Intelligence Unit of India (FIU-India). According to the notification, entities operating in the VDA will be treated as “reporting entities” under the Money Laundering Act. Banks, financial institutions, entities involved in real estate, jewelery and casinos will now be ‘reporting entities’.
Also under the Act, every reporting entity is required to maintain a record of all transactions including a record of all cash transactions above Rs 10 lakh for a minimum period of five years. Note that crypto is a completely private currency that is not ledger tender (legal tender) and is not monitored by any government. Also it is not controlled by any government or central bank. Through this, transactions can be done digitally.
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What is the benefit of the new rule?
This central government regulation will now make it difficult to do any illegal activity through crypto in the country. The Prime Minister Narendra Modi-led government has introduced anti-money laundering provisions on digital assets such as cryptocurrencies in a bid to tighten monitoring of digital assets. Also the central government has introduced anti-money laundering provisions on cryptocurrencies or virtual digital assets to tighten monitoring of digital assets.
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Now that money laundering rules are in place on crypto, the administration will be able to monitor the transfer of these assets outside the country’s borders. In addition, crypto exchanges and intermediaries dealing in Virtual Digital Assets (VDA) will now be required to KYC their customers and users of the platform.
Support of the Global Framework
Union Finance Minister Nirmala Sitharaman recently advocated a global framework for cryptocurrencies and addressed global debt fragility as well as strengthening multilateral development banks. At the same time, the country’s central bank, the Reserve Bank of India, is also supporting new regulations for cryptocurrencies, saying it is similar to a Ponzi scheme.