According to a report from Reuters, the Indian government has decided to introduce money laundering provisions in the crypto sector. The Ministry of Finance issued a notice on Tuesday stating that anti-money laundering laws will apply to crypto trading, safekeeping, and other financial services.
The notice released by the government lacked details. Still, the Money Laundering Prevention Act mandates that financial institutions must keep records of all transactions for the past ten years.
Financial institutions must provide these records to regulators if necessary. These records must be verified, and the financial institution must identify all clients.
This is India’s latest move to ensure strict oversight of digital assets. This step has been taken to align itself with the global practice that demands crypto platforms to “follow the same anti-money laundering standards as those applied by other regulated entities like banks or stockbrokers,” as Jaideep Reddy, a consultant at Trilegal law firm, said. .
India’s concern about crypto has led to strict tax rules imposed on the crypto sector, including heavy taxes imposed on crypto trading.
India’s move to implement such draconian policies in the industry is also responsible for the decline in trade volume in the country. Anti-money laundering measures may be difficult to implement because the necessary compliance measures will require more time and resources, as Reddy mentioned.
Crypto related scams are on the rise in India
This move is to enforce anti-money laundering (AML) regulations after India has witnessed several cases of crypto-related scandals in the country. Late last year, hackers had taken down the All India Institute of Medical Sciences (AIIMS) internet server and demanded a ransom of over $24 million in crypto.
In November, India’s Enforcement Directorate (ED) seized nearly $2.5 million worth of Bitcoins from an illegal gaming platform called E-nuggets. ED has broken into Binance users’ wallets, linked them to mobile gaming apps, and frozen 150.22 Bitcoins.
Earlier, the ED had suspended the account balances of many Chinese-operated entities in connection with and investigated the HPZ app-based token. The regulator froze the amount worth Rs 9.82 crores, approximately $1,218,500.
India Pushes For Blanket Ban
In February, the Reserve Bank of India (RBI), India’s Central Bank, expressed concern about crypto and called for a ban. Indian authorities want a preemptive ban on cryptocurrency ads and sponsorships displayed in women’s cricket leagues.
However, India’s Finance Minister, Nirmala Sitharaman, did not say anything about a blanket ban on digital assets. While celebrating India’s first presidency of the G20 summit, Sitharaman encouraged international efforts to regulate the industry as a whole.
He wants to have a coordinated effort “to build and understand the macro-financial implications,” because he believes that only with self-regulation can the industry change globally.
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