New Regulations Bring Virtual Assets Under Money Laundering Laws

The government said in a notification that participation in transactions involving virtual digital assets would be under the Prevention of Money Laundering Act (PMLA).

Virtual digital asset refers to any information, code, number, or token generated through cryptographic means or otherwise and can be called by whatever name.

According to the notification, “Exchange and transfer of virtual digital assets would also fall under PMLA laws”.

On March 7, The Gazette of India published a notification by the Ministry of Finance that brought several crypto transactions under the purview of the Prevention of Money Laundering Act, 2002 (PLMA), namely the exchange, transfer, custody, and management of virtual assets. The PMLA also covers financial services related to the offer and sale of virtual assets by the issuer.

The ministry warned investors against participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset in the gazette.

The move is the latest step taken by the government to tighten oversight of digital assets.

The Department of Law Enforcement, which has the power to investigate cases of money laundering and foreign exchange violations, has previously investigated crypto companies, including exchanges CoinSwitch Kuber and WazirX.

Imposing anti-money laundering (AML) cryptographic standards is nothing new, but only recently has the Indian government decided to inform all parties of their obligations to comply with domestic AML laws.

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