Cryptocurrency transactions under PMLA law

The finance ministry announced today that cryptocurrencies transactions would come under the ambit of money laundering provisions. The Prevention of Money Laundering Act PMLA is the latest step taken by the government to tighten oversight of digital assets, according to a notification by the government.

The ministry warned against participation in and provision of financial services related to an issuer's offer and sale of a virtual asset. The notification said that the exchange and transfer of virtual assets would fall under PMLA laws.

Ashish Singhal, CoinSwitch co-founder Ashish Singhal, said the notification to bring VDA transactions under PMLA was a positive step in recognition of the sector.

According to the Income Tax Act, any information, code, number or token is not an Indian currency or foreign currency generated through digital means or otherwise and can be called by whatever name.

The Enforcement Directorate, which has the responsibility to investigate money laundering and forex violations cases, has already been investigating the exchanges CoinSwitch Kuber and WazirX.

The latest move by India aligns with a global trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stockbrokers, said Jaideep Reddy, counsel at law firm Trilegal.