Context: India’s Financial Intelligence Unit has issued show-cause notices to nine offshore crypto-currency operators, including Binance, for not complying with the Prevention of Money Laundering Act, 2002 (PMLA).
Financial Intelligence Unit India (FIU IND) issues compliance Show Cause Notices to nine offshore Virtual Digital Asset Service Providers (VDA SPs)
- The compliance Show Cause Notices have been issued to nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the PMLA.
- These include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
- The Ministry of Electronics and Information Technology has been asked to block the URLs of these nine entities as they have been operating illegally in India without complying with the provisions of PMLA.
About Virtual Digital Asset Service Providers (VDA SPs)
- VDA SPs are 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.
- They were brought under the ambit of the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act, 2002 in March 2023.
- They must be registered with Financial Intelligence Unit as a Reporting Entity and comply with the set of obligations as mandated under the PML Act.
- The obligation is activity-based and is not contingent on physical presence in India.
- The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act, including registration with the Financial Intelligence Unit .
- Till date, 31 VDA SPs have registered with Financial Intelligence Unit .
About Financial Intelligence Unit
- Financial Intelligence Unit is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
- Functions: To receive cash/suspicious transaction reports, analyse them and, as appropriate, disseminate valuable financial information to intelligence/enforcement agencies and regulatory authorities.
- Information Gathering: Serve as the primary point of contact for reports on the purchase or sale of immovable property (IPRs), suspicious transaction reports (STRs), cross-border wire transfer reports (CBWTRs), and cash transaction reports (CTRs) from various reporting institutions.
- Information Analysis: Analyze received information to uncover patterns of transactions suggesting suspicion of money laundering and related crimes.
- Information sharing: Sharing information with national intelligence/law enforcement agencies, national regulatory authorities and foreign Financial Intelligence Units.
- Central Repository: Establish and maintain a national database on cash transactions and suspicious transactions based on reports received from reporting entities.
- Coordination: Coordinate and strengthen collection and sharing of financial intelligence through an effective national, regional and global network to combat money laundering and related crimes.
- Research and Analysis: Monitor and identify strategic key areas on money laundering trends, typologies and developments.
- It is a multidisciplinary body with a sanctioned strength of 75 Personnel from various government departments.
- The members are inducted from organizations including the Central Board of Direct Taxes (CBDT), Central Board of Excise and Customs (CBEC), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Department of Legal Affairs and Intelligence agencies.
About Prevention Of Money Laundering Act (PMLA), 2002
The Prevention of Money Laundering Act (PMLA), enacted in 2002 in India, provides a legal framework for preventing money laundering, ensuring India is in line with international standards for combating financial crimes.
Key Features of PMLA Act 2002:
- Definition of Money Laundering: The Act defines money laundering as acquiring, possessing, or transferring any proceeds of a crime or knowingly entering into a transaction related to the proceeds of a crime.
- Punishments and Penalties: It prescribes stringent penalties for those involved in money laundering, including imprisonment and fines.
- Attachment and Confiscation of Property: It empowers authorities to attach and confiscate property from laundered money.
- Reporting Obligations: Financial institutions and other entities must maintain records and report high-value transactions and suspicious activities.
- Establishment of Adjudicating Authority: It establishes authorities responsible for enforcing the provisions of the Act, like the Adjudicating Authority, the Appellate Tribunal, and the Director (Financial Intelligence Unit).
- International Cooperation: It facilitates international cooperation in cross-border money laundering cases.
Also Read: Questionable Searches Under The Money Laundering Act |
News Source: HT
December 29, 2023