Crypto & NFT businesses are now ‘reporting entities’ under the Prevention of Money-Laundering Act (PMLA).

 

The Govt. of India recently announced that all Crypto & NFT businesses are now ‘reporting entities’ under the Prevention of Money-Laundering Act (PMLA).

A lot of offline chatter as well as clickbait headlines have been confusing this as an offence charged to crypto companies under the PMLA which is not true!

Here’s what this means for the Indian crypto ecosystem –
1. All crypto companies (exchanges, custodians, wallet providers etc) need to follow similar reporting standards and KYC norms to other reporting entities like banks, securities intermediaries, payment system operators, etc. In other words, KYC norms are no longer a best practice (which was self regulatory by most Indian exchanges) but a legal obligation.

2. All such businesses now have the legal status to report suspicious transactions to the Financial Intelligence Unit (FIU).

3. All individuals or businesses accepting money in crypto from foreign clients can continue to do so, but they have to make sure they are declared to the government (either through their IT returns or other means of disclosure)

GOI has taken a huge step towards regulating the Indian crypto industry. A regulated environment is an indication that the Indian government is ensuring the industry’s success.

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