Lawyers and industry experts say that India's regulators now have more power over the crypto industry since the Finance Ministry included crypto businesses in anti-money laundering rules. This means that crypto-related businesses must comply with mandatory processes, including registering with the Financial Intelligence Unit, performing Know Your Customer verifications, and reporting suspicious activities. Failure to comply with these rules can result in penalties up to $1,220.
Lawyers and industry participants have said that India's inclusion of crypto businesses under anti-money laundering (AML) rules is a significant move that gives regulators teeth to oversee the industry for the first time. Under the new rules, crypto-related businesses must register with the Financial Intelligence Unit and comply with mandatory processes under the Prevention of Money Laundering Act, including performing verification processes like Know Your Customer and reporting suspicious activities. Failure to comply can result in penalties of up to $1,220.
The move follows the Financial Action Task Force's call for nations to fast-track checks on crypto users' identities, and some industry leaders have welcomed it as a step towards curbing bad actors and giving crypto in India more legitimacy. However, some in the industry have expressed concerns that the new regime could have a negative impact on centralized crypto entities in India and may result in businesses moving to decentralized exchanges and companies.