Binance, 8 others get show-cause notice from India's Financial Intelligence Unit
The Indian finance ministry has also written to Ministry of Electronics and Information Technology to block the URLs of the nine entities that it says are operating illegally without complying with money laundering laws.
The other offshore Virtual Digital Assets service providers to have been handed the compliance notice include Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
The Indian finance ministry has sent compliance show-cause notices to nine offshore Virtual Digital Assets service providers, including Binance, and told the information technology ministry to block their URLs for operating illegally in the country without complying with the local money laundering laws.
The nine entities are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
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In a statement issued on December 28, the finance ministry said that offshore and onshore Virtual Digital Asset service providers operating in India and involved in activities including exchange between virtual digital assets and fiat currencies, transfer and administration of virtual digital assets or instruments enabling control over them must register with Financial Intelligence Unit-India and comply with the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
Financial Intelligence Unit-India is the national agency responsible for receiving, analysing, and disseminating information relating to suspect financial transactions to enforcement agencies and its foreign counterparts.
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"The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND," the finance ministry's statement said, adding that so far 31 service providers of virtual digital assets have registered with Financial Intelligence Unit.
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"However, several offshore entities though catering to a substantial part of Indian users were not getting registered and coming under the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework," the finance ministry added.
Crypto exchanges the world over are under a cloud, with big collapses - such as that of FTX - sending shock-waves through the sector. More recently, in November, Changpeng Zhao stepped down as the head of Binance after pleading guilty to breaking US anti-money laundering laws. Zhao's resignation was part of a multi-billion dollar settlement following an investigation into the world's largest crypto exchange.
