India’s Financial Intelligence Unit (FIU) has taken stringent measures against nine offshore Virtual Assets Service Providers (VASPs) for non-compliance with India’s Anti-Money Laundering and Counter Financing of Terrorism (AML-CFT) laws, according to a Dec. 28 annoucement.

These entities, which include major players like Binance, KuCoin, and Huobi, have been served Show Cause Notices under the Prevention of Money Laundering Act (PMLA), marking a significant escalation in India’s enforcement of financial regulations in the digital asset space.

Unregistered operations

The move comes after the inclusion of VASPs under the AML-CFT framework in March 2023, highlighting India’s commitment to regulating the rapidly evolving virtual asset sector.

The FIU’s action targets entities operating without registration and compliance with the PMLA, necessitating a response to explain their operations in relation to Indian users.

The list of entities issued notices includes renowned global firms such as Binance with multiple global addresses, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

These organizations, hailing from various jurisdictions such as the Seychelles, Singapore, the British Virgin Islands, the United States, Luxembourg, and the Cayman Islands, are now under scrutiny for their operations involving Indian users.

Further tightening the regulatory noose, the Director of FIU IND has requested the Ministry of Electronics and Information Technology to block the URLs of these entities, citing their illegal operation without adherence to Indian laws.

31 registered entities

This step is part of a broader effort to safeguard the Indian financial system from unregulated virtual asset transaction risks.

These developments underscore the Indian government’s stance on ensuring that all VASPs, regardless of their physical presence, adhere to the local laws if they cater to Indian users.

Currently, 31 VASPs have successfully registered with the FIU and are fully compliant with the AML and CFT framework. The action against the nine offshore entities sends a clear message about India’s intent to rigorously enforce its financial regulations, especially in the context of the growing prominence of virtual assets.

The compliance requirements extend beyond registration to include stringent reporting, record-keeping, and adherence to the PMLA.