According to the new rules made under the PMLA act, cryptocurrency transactions and virtual assets will now be considered money laundering under Indian law.
Cracking down on the use of cryptocurrency in India, the Finance Ministry of the country has announced that crypto transactions will now be considered as money laundering, and the norms will fall under the Prevention of Money Laundering Act (PMLA).
This means that any person who makes crypto transactions can be booked under the PMLA act and can face the designated punishment. This move by the Centre has been introduced as a way to combat and tighten the oversight of digital assets.
In a gazette notification, the Finance Ministry said the anti-money laundering legislation has been applied to crypto trading, safekeeping, and related financial services. After this, Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
The move is in line with the global trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.
Digital currency and assets like NFTs (non-fungible tokens) have gained traction globally over the last couple of years. Trading in these assets has increased manifold with cryptocurrency exchanges being launched. However, India till last year, did not have a clear policy on either regulating or taxing such asset classes.
This means that all the transactions that are linked to exchanging virtual digital assets (VDA) will now fall under anti-money laundering rules in India. The move was hailed by CoinSwitch co-founder Ashish Singhal, who said that this was a positive step towards the recognition of the industry.
Currently, apart from banks and financial institutions, entities engaged in real estate and jewelry sectors as well as casinos are considered 'reporting entities' under the PMLA. Every reporting entity is required to maintain a record of all transactions, including the record of all cash transactions of more than Rs 10 lakh.
This new rule and revisions under the PMLA are aimed at controlling the unregulated usage of digital currencies and virtual assets and will make sure that all the rules are followed when it comes to cryptocurrencies.
(With PTI inputs)
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