Crypto exchanges and intermediaries dealing with virtual digital assets (VDA) will now be required to perform KYC of their clients and users of the platform. Besides, exchanges will have to report suspicious activity to the Financial Intelligence Unit India.
The notification says entities dealing in VDA will be considered “reporting entity” under PMLA-banks, financial institutions, entities engaged in real estate and jewellery sectors as well as casinos are ‘reporting entities’ now. Under this law, every reporting entity is required to maintain a record of all transactions.
Crypto entities have to maintain records
The Centre’s move to bring the cryptocurrency sector under the ambit of PMLA is in line with the global trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.
A gazette notification issued said that “exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets (VDA), safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset” will be now be covered under the Prevention of Money Laundering Act, 2002.
The notification says entities dealing in VDA will now be considered ‘reporting entity’ under PMLA. Under this law, every reporting entity is required to maintain a record of all transactions, including the record of all cash transactions of more than Rs 10 lakh, for at least five years. They are also required to maintain a record of all series of cash transactions integrally connected to each other, which have been individually valued below Rs 10 lakh, where such series of transactions have taken place within a month and the monthly aggregate exceeds Rs 10 lakh.