India’s government has updated the regulations it imposes on cryptocurrency services providers, as part of its efforts to combat fraud, money laundering, and terrorism.
The nation’s Financial Intelligence Unit (FIU-IND) recently posted updated guidelines [PDF] that require all crypto players who serve Indian residents – even operations outside India – to register and name certain officers, their place of business, and detail “significant business ownership etc.”
The revised guidance requires registered crypto outfits (REs) to implement strict client due diligence measures, at least for new customers, that require them to collect details of customers’ identity documents, bank account details, occupation, and even income range.
The regulation also requires REs to collect “Latitude and longitude coordinates of the onboarding location with date and timestamp along with IP address” and to secure a selfie of new customers to prove they are alive and a real person.
The document explains this regime is needed due to “the anonymous and instantaneous nature of [virtual digital asset] VDA transactions and the potential of services offered by REs being misused by illicit actors for the purpose of money laundering, terror financing and proliferation financing.”
One selfie may not be enough, because the rules call for REs to review their client base from time to time.
The updated rules also spell out a requirement for constant transaction monitoring and reporting of suspicious fiat-to-fiat, virtual-to-virtual, fiat-to-virtual, or virtual-to-fiat transactions.
Crypto players must report transactions when they have “reasonable grounds to believe that the transactions involve proceeds of crime or financing of terrorism.”
Those reports must provide as much information as possible about the parties to a transaction, and REs must file them as soon as they detect potentially dodgy dealings.
India is home to the world’s largest collection of cryptocurrency investors and is also acutely attuned to the threat of terrorism. These updated regulations, which do not vastly exceed regulations imposed on conventional financial institutions, therefore don’t represent a policy adventure.
However, by requiring offshore players to participate, the rules represent another example of India imposing onerous requirements on tech companies that see it as a target market. Such efforts have not always ended well for India – a recent attempt to have smartphone makers install government apps collapsed within days – but the nation’s government continues to try to find a balance between working with Big Tech to bring its citizens useful services while ensuring that tech giants don’t dominate to the extent that local firms struggle to flourish. ®
Source: The register