India imposes Money Laundering Laws on Cryptocurrency Transactions

New Delhi :

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According to reports, the Indian government has recently implemented measures to increase supervision of digital assets and has included money laundering regulations in the cryptocurrency industry.

Money Laundering Laws Applicable To Cryptocurrencies

The Finance Ministry announced on Tuesday that a notice has been issued stating that anti-money laundering legislation will now apply to cryptocurrency trading, safekeeping, and other financial services.

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The federal government of India stated that with this measure in place, its money laundering laws will now be applicable to the trade in cryptocurrencies.

This action seems to be in line with the global trend of mandating digital-asset platforms to adhere to anti-money laundering standards that are similar to those followed by regulated entities such as banks or stockbrokers.

Jaideep Reddy, a counsel at law firm Trilegal, confirmed this trend,

stating that digital-asset platforms must follow similar anti-money laundering standards as regulated entities.

How Does This Help?

In the past, the Indian government had introduced stricter tax regulations for the cryptocurrency industry, such as imposing a trading levy last year.

These rules, combined with a worldwide decline in digital assets, led to a significant drop in domestic trading volumes.

Recently, India’s Enforcement Directorate, responsible for investigating money laundering and foreign exchange violations, has started probing crypto companies, including CoinSwitch Kuber and WazirX.

Moreover, Reddy expressed concern that the new anti-money laundering provision could be challenging to implement as complying with the necessary regulatory measures is likely to require considerable time and resources.

The notice states that the transfer of digital assets, as well as the exchange between virtual digital assets and fiat currencies or between multiple forms of virtual digital assets, will be subject to money laundering regulations.

It is important to note that while India’s central bank has issued multiple warnings against the use of cryptocurrencies, the government has yet to finalize legislation and regulations regarding them.

The Reserve Bank of India has likened cryptocurrencies to Ponzi schemes and advocated for their banning.

By extending India’s money laundering regulations to cryptocurrencies, authorities will have increased power to monitor the transfer of these assets beyond the country’s borders.

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