The latest step by the Indian government to tighten oversight of digital assets has reportedly imposed money laundering provisions on the cryptocurrency sector.
Money Laundering Laws Applicable To Cryptocurrencies
On Tuesday, the Finance Ministry said that anti-money laundering legislation has been applied to crypto trading, safekeeping and related financial services in a notice.
With this in place, India’s money laundering laws will apply to trade in cryptocurrencies, the federal government said in a notification dated March 7.
It appears that the move by India aligns with a global trend of requiring digital-asset platforms.
The counsel at law firm Trilegal, Jaideep Reddy said, “to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.”
How Does This Help?
Earlier, the government had implemented more stringent tax rules on the crypto sector, including applying a levy o.n trading last year.
Notably, these rules, as well as a global rout in digital assets, caused a plunge in domestic trading volumes.
It has already started as the India’s Enforcement Directorate, which has the mandate to investigate money laundering and forex violation cases, has already been probing crypto companies including exchanges CoinSwitch Kuber and WazirX.
Further Reddy said, “the latest anti-money laundering measure is concerning as implementing the requisite compliance measures is likely to require time and resources,”.
The notification said, the exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets and the transfer of digital assets will be covered under money laundering laws.
It is noteworthy here that the government is yet to finalize legislation and regulations surrounding cryptocurrencies even as the country’s central bank has cautioned against their use multiple times.
In this regard, the Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme.
This move of extending India’s money laundering rules to cryptocurrencies will give authorities greater authority in monitoring the transfer of these assets beyond the country’s borders.
