India's Bharat Web3 Association Holds Workshop on Anti-Money Laundering Compliance for Crypto Firms

The Bharat Web3 Association conducted a training workshop for Virtual Digital Asset Service Providers to facilitate knowledge sharing on compliance requirements under India's Prevention of Money Laundering Act. Major global crypto exchanges like Binance and Kucoin have registered with India's Financial Intelligence Unit, marking a significant shift in the country's approach to cryptocurrency regulation.

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Bijay Laxmi
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India's Bharat Web3 Association Holds Workshop on Anti-Money Laundering Compliance for Crypto Firms

India's Bharat Web3 Association Holds Workshop on Anti-Money Laundering Compliance for Crypto Firms

On May 13, 2024, the Bharat Web3 Association (BWA) conducted a training and capacity building workshop for Virtual Digital Asset Service Providers (VDASPs) that are Reporting Entities under India's Prevention of Money Laundering Act (PMLA). The workshop aimed to facilitate knowledge sharing on compliance requirements for VDASPs and gather feedback on the challenges they face in adhering to PMLA regulations.

Why this matters: The development of a robust AML/CFT compliance framework for India's crypto industry has significant implications for the global digital finance landscape, as it sets a precedent for other countries to follow. Effective regulation of cryptocurrency transactions can help prevent illicit activities and promote trust in the system, ultimately driving mainstream adoption.

The workshop was attended by 60 representatives from 35 Reporting Entities, including founders and senior leaders from prominent VDA players such as CoinDCX, CoinSwitch, WazirX, and Mudrex. Shri Vivek Aggarwal, Director of the Financial Intelligence Unit-India (FIU-IND) and Additional Secretary in the Department of Revenue, emphasized the importance of compliance with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework under the PMLA for VDASPs serving Indian users.

Aggarwal stated, "Obligations are activity-based rather than dependent on physical presence in India, underscoring the objective and intent to track and trace fraudulent activities effectively." His remarks highlight the government's focus on ensuring offshore crypto exchanges and service providers comply with India's stringent financial regulations.

The workshop saw participation from Kucoin, the first international VDASP registered with FIU-IND, marking a significant step towards establishing a robust AML/CFT compliance framework for India's crypto industry. This development comes after the Indian government extended its AML/CFT framework in March to include VDASPs, and the FIU issued compliance notices to platforms like Binance and Kucoin for not registering as reporting entities.

Binance has since completed its initial registration with FIU-IND, following in the footsteps of Kucoin. Kucoin paid a $41,000 fine and restarted operations in India, while Binance will need to settle a $2 million penalty after a hearing with the FIU before resuming business. India now has 48 crypto firms registered as reporting entities under the PMLA.

The BWA also launched a comprehensive document at the workshop charting the journey of VDASPs in getting registered as Reporting Entities. Mr. Dilip Chenoy, Chairperson of the BWA, said, "BWA strives to serve as a collaborative platform for industry stakeholders, policymakers, and regulators to ensure a compliant ecosystem for VDASPs. Through our member firms, we aim to lead the way in AML/CFT compliance and share best practices within the sector."

The registration of major global crypto exchanges like Binance and Kucoin with India's FIU marks a significant shift in the country's approach to cryptocurrency regulation. These developments are crucial in a global landscape where the integration of digital assets into mainstream financial systems demands rigorous regulatory frameworks. India's commitment to ensuring a secure and compliant environment for crypto transactions positions the nation as a potential hub for blockchain and digital finance innovation.

Key Takeaways

  • Bharat Web3 Association conducts training workshop for VDASPs on AML/CFT compliance.
  • India's PMLA regulations set a precedent for global crypto industry regulation.
  • 60 reps from 35 Reporting Entities attended, including CoinDCX, WazirX, and Mudrex.
  • Kucoin, Binance register with FIU-IND, marking a significant step in AML/CFT compliance.
  • India now has 48 crypto firms registered as reporting entities under PMLA.