India's new anti-money laundering provisions for crypto & virtual assets, including reporting suspicious activity to the FIU-IND
The Indian government has recently announced anti-money laundering provisions on cryptocurrencies and virtual assets which are in line with the global trend of requiring digital-asset platforms to follow anti-money laundering standards.
The Prevention of Money-laundering Act, 2002 will be applied to crypto trading, safekeeping, and other crypto services. Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
This move by the government will provide tighter oversight of digital assets and will require crypto platforms to adhere to the same regulations as other regulated entities like stocks and securities.
India had no clear policy on regulating or taxing digital currency and assets like NFTs until last year. However, the trading of these assets has increased manifold with the launch of cryptocurrency exchanges.
A few weeks ago FM Nirmala Sitharaman had stated that India was discussing with the G-20 member countries the need to develop a standard operating protocol for regulating crypto assets.
The Budget for 2022-23 had brought a 30% tax on income from transactions in virtual assets, and a 1% TDS (tax deducted at source) on transactions in virtual asset classes above a certain threshold.
Gifts in crypto and digital assets were also taxed similarly. The Indian government is working towards regulating and taxing digital assets to bring them under tighter oversight.