While there’s nothing new in imposing Anti-Money Laundering standards 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.
The Gazette of India published a notification from the Ministry of Finance, subjecting a range of crypto transactions to the Prevention of Money-Laundering Act 2002 namely the exchange, transfers, safekeeping and administration of virtual assets. Financial services related to an issuer’s offer and sale of virtual assets also fall under the PMLA.
The notification doesn’t provide many details, but the PMLA obliges financial institutions to maintain a record of all transactions for the last ten years, provide these records to officials if demanded, and verify the identity of all the clients.
Published as regulators worldwide are tightening AML standards for crypto, the notification will complicate the life of crypto companies in India. And it already has not been too comfortable in recent years. From March 2022, according to amended tax rules, digital assets holdings and transfers are subject to a 30% tax.
Trading volume on major cryptocurrency exchanges across India dropped by 70% within 10 days of the new tax policy, and almost 90% over the next three months. The rigid tax policy drove crypto traders to offshore exchanges and forced budding crypto projects to move outside India.
