Thursday, March 9, 2023

Cryptocurrency into money laundering legislation

Govt brings crypto under money laundering law

 Delhi, India: The Centre has added crypto trading, safekeeping, and related financial services to the Prevention of Money Laundering Act as its latest move to tighten oversight of digital assets. On Tuesday, the Union finance ministry published a notice in the gazette in this regard.

Clients and platform users of crypto exchanges and intermediaries dealing with virtual digital assets (VDA) will now be required to complete KYC. Additionally, exchanges will be required to notify the Financial Intelligence Unit of India of any suspicious activity.

According to the notification, entities that deal in VDA will be regarded as a "reporting entity" under the PMLA. Casinos, financial institutions involved in the real estate and jewelry industries, as well as banks, are already "reporting entities." This law mandates that each reporting entity keep track of all transactions.

Cryptocurrencies must keep records. The Center's decision to include the cryptocurrency industry in PMLA is in line with the global trend of requiring digital asset platforms to adhere to anti-money laundering regulations similar to those of banks and stock brokers.

According to a gazette notification, the Prevention of Money Laundering Act of 2002 will now cover "exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets (VDA), safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer's offer and sale of a virtual digital asset."

According to the announcement, entities that deal in VDA will now be regarded as a "reporting entity" under PMLA. Every reporting entity is required to keep a record of all transactions for at least five years under this law, including records of cash transactions exceeding Rs 10 lakh. They are also required to keep a record of any series of cash transactions that are integrally connected to one another and have an individual value of less than Rs 10 lakh, if the series of transactions occurred within a month and the monthly aggregate exceeded Rs 10 lakh.

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