On September 9, notices for non-compliance were sent out to 15 Virtual Digital Asset Service Providers (VDA SPs) by the Director of the Financial Intelligence Unit India (FIU-IND). As per the statement released by the Ministry of Finance, notices have been sent to companies like Weex International Exchange, Blofin Exchange, Rezorex, Bitunix, DigiFinex, Toolbit, Latoken, WhiteBIT, Guardarian, SimpleSwap, Pionex, among others, under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA). It is imperative that these service providers register under the PMLA.
VDA Platforms Must Register With FIU-IND as Reporting Entities
As per the statement released, the Director has also issued notices to the companies to remove the application/URLs from public access, which were being used illegally without adhering to the PMLA rules in India under Rule 3(1)(d) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2025, according to the statement.
One can observe that Virtual Digital Asset Service Providers (VDA SPs) came within the purview of Anti Money Laundering/ Counter Financing of Terrorism (AML/CFT) framework through the Prevention of Money Laundering Act, 2002, in March 2023.
The VDA SPs functioning in India, whether offshore or onshore, which indulge in activities such as exchange between virtual digital assets and fiat currency. Movement, storage, or administration of virtual digital assets or instruments that control them must register themselves as a Reporting Entity with FIU-IND and fulfil certain obligations laid down under the Prevention of Money Laundering Act, 2002 (PMLA) and Rules.
These obligations are action-based and do not depend on whether or not the entity is physically present in India. Reporting and record-keeping duties, among others, have been imposed on the VDA SPs through the PMLA, which also require them to be registered with FIU-IND, the statement said. As far as the safety of the general public is concerned, it should be noted that crypto products and NFTs are not regulated and can be quite risky. There may be no regulation-based remedy for any kind of loss through such transactions, the statement said.
In April, the government had made another move to improve control over Virtual Digital Assets (VDAs). The Income Tax (IT) Department had reportedly begun issuing tax notices to crypto investors who failed to report their crypto transactions from past financial years. According to a new report, the decision came after increased investigation using transaction data to find discrepancies between reported income and exchange data. These notices allowed investors to disclose unreported income before any kind of formal proceedings.
