The Financial Intelligence Unit (FIU), a regulatory body in India overseeing financial transactions, declared on Thursday that nine prominent global cryptocurrency exchanges, including Binance, Kraken, Kucoin, and Mexc, are operating without proper adherence to the country’s anti-money laundering regulations. As a result, the FIU has urged the IT Ministry to restrict access to these exchanges’ websites within India.
The FIU has initiated inquiries against these nine exchanges, emphasizing that even if these platforms lack physical operations in India, they are obligated to adhere to the nation’s stringent anti-money laundering and counter-financing of terrorism regulations.
Highlighting the issue, the FIU stated, “Despite serving a significant number of Indian users, several international crypto entities have sidestepped registration requirements under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.”
According to TechCrunch, India expanded its regulatory framework to include cryptocurrencies within its anti-money laundering and counter-terrorism financing framework earlier this year. As per FIU records, 31 cryptocurrency entities have since registered with the authority.
There has been a noticeable trend of Indian traders gravitating towards global cryptocurrency platforms, ostensibly to circumvent tax obligations. Last year, India instituted a tax on virtual currencies, imposing a 30% tax on profits and a 1% levy on individual crypto transactions.
In contrast to Indian-based platforms like CoinSwitch Kuber, CoinDCX, and WazirX, which adhere to stringent user verification protocols, several international exchanges have been less rigorous. This laxity has been reflected in platforms like WazirX, which has witnessed a substantial 97% decline in trading volume over two years due to users migrating to global alternatives.
In addition to the aforementioned exchanges, others found non-compliant with Indian regulations include Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex. Notably, Coinbase halted its registration process for Indian users some months back.
Sumit Gupta, the CEO of CoinDCX, commented, “The majority of Indian crypto exchanges are compliant with FIU regulations and the Prevention of Money Laundering Act. FIU IND’s recent actions against overseas Virtual Digital Assets Service Providers (VDA SPs) will bolster security measures and ensure a safer VDA environment.”
Meanwhile, Binance’s CEO, Changpeng “CZ” Zhao, indicated to TechCrunch previously that the platform wasn’t enthusiastic about expanding operations in India due to the prevailing regulatory climate in the region.
