AML Compliance Failures Put 15 Crypto Platforms in India Under Watch

India’s Financial Intelligence Unit (FIU-IND) has taken enforcement action against 15 cryptocurrency platforms over alleged violations of the country’s anti-money laundering rules.

The agency issued non-compliance notices Tuesday under Section 13 of the Prevention of Money Laundering Act. The notices were directed at small and medium-sized virtual digital asset service providers, including Weex, Blofin, Rezorex, Bitunix, DigiFinex, Toobit, XT.com, Latoken, WOO X, Pionex, ChangeNow, SimpleSwap, FixedFloat, WhiteBIT and Guardarian.

India brought crypto exchanges and other virtual digital asset (VDA) service providers under its anti-money laundering framework in March 2023. The rules apply to platforms serving Indian customers regardless of whether they maintain an office or other physical presence within the country.

Crypto platforms covered by the framework must register with FIU-IND and meet several compliance obligations, including verifying customers, maintaining transaction records and reporting suspicious activity to government authorities.

The financial intelligence agency also warned consumers about the risks associated with cryptocurrencies and non-fungible tokens (NFTs). It said these products are unregulated and can be highly risky, adding that users may have no regulatory recourse if they suffer losses from such transactions.

The latest crackdown comes days after The Economic Times reported that some Indian users are moving stablecoins such as USDT to platforms operating in Sweden, Germany and Singapore. These platforms reportedly convert the crypto into gift cards, which are subsequently used in India to purchase groceries, fuel and gold.

The practice could allow funds to bypass domestic crypto exchanges and make transactions less visible to Indian authorities.

FIU-IND previously targeted nine major offshore crypto exchanges in December 2023, including Binance, Kraken and KuCoin. The agency issued compliance show-cause notices and asked the IT ministry to block the platforms’ URLs over alleged illegal operations in India, according to the Press Information Bureau.

Binance later registered with FIU-IND and paid INR 18.82 crore in penalties for anti-money laundering violations. The record enforcement action demonstrated the growing pressure on offshore crypto companies to comply with India’s regulatory requirements when serving local users.