Govt Brings Crypto Business Under PMLA Ambit
By Manoj Dharra
India government has finally put a foot forward by bringing crypto exchange business activity under the ambit of the Prevention of Money Laundering Act, 2002 (PMLA). Notification to this effect was issued by the finance ministry today, which sealed the fate of crypto or virtual asset businesses in the country.
Industry participants have expressed mixed views on the development. While some have viewed it as a great step towards compliance of the fledgling industry, while few others are still not convinced by its effectiveness.
“I have a different view here. Creating a reporting responsibility doesn’t change anything from liability perspective! Enforcement Directorate (ED) was anyway after every crypto exchange so they don’t need this clause to take action…. indirect relationship with proceeds of crime is sufficient enough for LEA to invoke PMLA which they have been doing anyway! This inclusion is much more beneficial than negative as it atleast provides a ground to argue that we did requisite disclosures,” said an industry official…
Meanwhile, industry participants are quick to point out positive influence of the same as well.
Sharat Chandra, Co-Founder India Blockchain Forum said that this notification is a great step towards compliance. “It mandates entities dealing in crypto to follow KYC, anti-money laundering regulations and due diligence as followed by banking and other financial entities which fall under the classification of reporting entities under PMLA,” he said.
“Slowly but surely, we are moving towards a regulated crypto ecosystem! Entities such as CoinDCX are now required by law to conduct due diligence and enhanced due diligence under the PMLA,” said Sumit Gupta, Co-Founder and CEO of CoinDCX, a crypto exchange.
With PMLA also comes compliances with a host of other laws. Take FEMA for example, said an industry expert who doesn’t wants to be quoted. He further suggested, “all exchanges and new entities to document everything. You will be able to respond to ED notices with ease if you document every transaction. A trade secret here is that once they are satisfied, they won’t come after you.”
Jayjit Biswas, founder Elite Forum said, “Eventually next line of action will be all exchanges has to be mandatorily register themselves with either RBI or SEBI and all the set of norms followed by any legit corporate has to be followed by them in addition to what stock broking firm follows. Due to nature of crypto AML, KYC and process of withdrawal has to be on top class as these three are major pain points of exchanges vis a vis public expectations.”
Supporting the decision is Nischal Shetty, Co-Founder of Wazirx, Twitted saying this is a good step towards regulating the crypto industry in India. This also ensures all crypto businesses must perform necessary KYC, transaction monitoring etc as part of their process.
It may be noted that the government has voiced its concern over private currencies such as Bitcoin, saying that they can potentially destroy the economy and is used in terror funding.
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