India Cracks Down on Crypto Exchanges with Tough New Anti-Money Laundering Rules
Image Source: Internet
India's financial watchdog has introduced stringent new guidelines for cryptocurrency exchanges, aimed at preventing money laundering and terrorist financing. The Financial Intelligence Unit (FIU) has mandated that exchanges register as reporting entities and submit regular reports on suspicious transactions. As part of the Know Your Customer (KYC) protocol, exchanges must now obtain a Permanent Account Number (PAN), a selfie with liveness detection, and geographical coordinates of the onboarding location. Clients must also verify their bank accounts through the 'penny-drop' method, which involves a refundable ₹1 credit. The guidelines discourage Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs), citing heightened money laundering and terror financing risks. Exchanges are also prohibited from facilitating anonymity-enhancing tokens, tumblers, and mixers, which conceal or obfuscate transaction details. To combat high-risk clients, exchanges must update their KYC records every six months and conduct enhanced client due diligence annually. The guidelines also require exchanges to preserve client ID, address, and transaction details for at least five years. The new rules aim to strengthen India's anti-money laundering and combating financing of terrorism framework, and exchanges must comply with the guidelines to operate in the country.
