As part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued show cause notices to nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act (PMLA).

According to an official release from the Ministry of Finance, “Virtual Digital Assets Service Providers (VDA SPs) were brought into the ambit of the Anti-Money Laundering and Counter-Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act in March 2023.”

“As part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued compliance Show Cause Notices to the following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA),” it said.

As per the release, the nine offshore Virtual Digital Assets Service Providers are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex.

“Director FIU IND has written to the Secretary of the Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India,” said the release.

VDA SPs operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, etc. are required to be registered with FIU IND as reporting entities and comply with the set of obligations as mandated under the Prevention of Money Laundering Act (PMLA) 2002, it said.

The obligation is activity-based and is not contingent on physical presence in India.

“The regulation places reporting, record-keeping, and other obligations on the VDA SPs under the PML Act, which also includes registration with the FIU IND,” said the release.

To date, 31 VDA SPs have registered with FIU IND. However, several offshore entities, though catering to a substantial part of Indian users, were not getting registered and coming under the Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) frameworks.