India Pushes Anti-money Laundering Regulation for Crypto Transactions

While there’s nothing new in imposing anti-money laundering regulation on crypto, it is only now that the Indian government has decided to notify all interested parties of the obligation to comply with the national AML law.

On March 7, The Gazette of India released a notification from the Ministry of Finance that subjected a variety of crypto transactions to the Prevention of Money-Laundering Act (PLMA) 2002, namely the exchange, transfers, custody, and administration of virtual assets. The PMLA also covers financial services relating to an issuer’s offer and sale of virtual assets.

The announcement is brief, but the PML Act requires financial institutions to keep a record of all transactions for the last ten years, submit this information to officials upon request, and verify the identification of all clients.

Perfect Timing for Anti-money Laundering Regulation

The anti-money laundering regulation comes at a time when authorities around the world are strengthening AML rules for cryptocurrency; yet, the notification would complicate the lives of crypto firms in India. And it hasn’t been all that comfy in recent years. According to new tax laws, digital asset ownership and transactions will be subject to a 30% tax beginning in March 2022.

Trade volume on major cryptocurrency exchanges in India fell by 70% within 10 days of the new tax regime, and by almost 90% within three months. The strict tax regime drove cryptocurrency traders to offshore exchanges and prompted new crypto ventures to relocate outside of India.

In February 2023, Indian authorities once again demonstrated their tough stance on cryptocurrencies with a preemptive ban on crypto advertising and sponsorships in the local women’s cricket league. This followed a previous ban for the men’s cricket Premier League, introduced back in 2022.

In 2023, while celebrating India’s first presidency at G20, the country’s Finance Minister, Nirmala Sitharaman, urged international efforts to regulate crypto. She called for a coordinated effort “for building and understanding the macro-financial implications,” which could be used to reform crypto regulation globally.