While there is nothing new about implementing anti-money laundering (AML) standards in crypto, it is only now that the Indian government has decided to notify all interested parties of their obligation to comply with the national AML law.
On March 7, The Gazette of India published a notice from the Ministry of Finance, subjecting some transactions with crypto to the Prevention of Money Laundering Act (PLMA) 2002 – namely the exchange, transfer, storage and administration of virtual assets. Financial services related to the offering of securities issuers and the sale of virtual assets also fall under the PMLA.
The notification did not provide many details, but the PML Act obliges financial institutions to maintain records of all transactions for the past ten years, provide these records to officials if requested, and verify the identity of all clients.
All crypto businesses in the country will be subject to PMLA
This is a great step to regulate the crypto industry in India
It also ensures that all crypto businesses have to do the necessary KYC, monitor transactions and more as part of the process.
Good progress ✌️ pic.twitter.com/lVhs5LWG4I
— Nischal (Shardeum) ⚡️ (@NischalShetty) March 8, 2023
Written at a time when regulators around the world are tightening AML standards for crypto, the news will complicate the life of crypto companies in India. And it has been very uncomfortable in recent years. From March 2022, according to the revised tax rules, the ownership and transfer of digital assets is subject to a 30% tax.
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Trading volume on India’s major cryptocurrency exchanges fell 70% within 10 days of the new tax policy and nearly 90% over the next three months. Rigid tax policies are pushing crypto traders to overseas exchanges and forcing budding crypto projects to move outside India.
In February 2023, the Indian authorities again showed a tough stance on cryptocurrencies with a preemptive ban on crypto advertising and sponsorship in the local women’s cricket league. This follows a previous ban for the men’s Premier League cricket, which began in 2022.
In 2023, while celebrating India’s first presidency at the G20, the country’s Finance Minister, Nirmala Sitharaman, urged international efforts to regulate crypto. He called for a coordinated effort “to build and understand the macro-financial implications,” which could be used to transform crypto regulation globally.