Financial Intelligence Unit, an Indian government agency which scrutinizes financial transactions, said Thursday nine global crypto exchanges — including Binance, Kraken, Kucoin and Mexc — are operating “illegally” in the country without complying with the local anti-money laundering act and requested the IT Ministry to block their websites.
FIU said it has issued show cause notices to all nine firms. Global crypto exchanges are required to comply with India’s anti-money laundering rules and cannot evade the guidelines just because they don’t have physical presence in the country, the government agency said.
Cryptocurrencies were brought into the ambit of anti-money laundering / counter financing of terrorism framework in in India in March this year.
Many Indian traders have switched to global cryptocurrency platforms in recent quarters in an apparent move to evade accountability.
While India-based crypto exchanges including a16z-backed CoinSwitch Kuber, B Capital-backed CoinDCX and former Binance-partner WazirX continue to require rigorous know-your-customer verifications before onboarding new users, same hasn’t been true of many global platforms.
Other exchanges found to be violating India’s law are Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex.
“Most Indian crypto exchanges are FIU registered entities and adhere with the Prevention of Money Laundering Act (PMLA). FIU IND’s recent directive to offshore Virtual Digital Assets Service Providers (VDA SPs) will help mitigate risks and create a secure VDA ecosystem,” said Sumit Gupta, co-founder and chief executive of CoinDCX, in a statement.
