India Requires Crypto Transactions to Comply with Anti-Money Laundering Law


In a recent move, the Indian government has mandated that all virtual asset transactions must adhere to the country’s Prevention of Money-Laundering Act (PMLA) 2002. This notification was published by the Ministry of Finance in The Gazette of India on March 7.

This notification applies to various activities related to crypto, such as exchange, transfers, safekeeping, and administration. Financial services associated with a digital asset issuer’s offer and sale are also now subject to PMLA compliance.

The announcement does not provide much detail, but the PMLA requires financial institutions to keep records of transactions for ten years, show them to authorities when demanded, and verify the identity of all clients.

The notification is in line with the tightening of AML regulations for crypto worldwide. It will add a layer of complexity to the operations of crypto companies in India, who have already been struggling since the introduction of a 30% tax on digital asset holdings and transfers in March 2022. After the policy was announced, trading volumes on major Indian crypto exchanges plummeted by 70% within ten days and 90% over the next three months. This drove many traders to offshore exchanges, and pushed some crypto projects to move outside of India.

In February 2023, the government further demonstrated their hard stance on digital currencies with a ban on crypto advertising and sponsorships in the women’s cricket league, following a similar ban for the men’s cricket Premier League in 2022.

At the 2023 G20 summit, where India held the presidency, Finance Minister Nirmala Sitharaman called for international collaboration to regulate the crypto sector, emphasizing the need to “build and understand the macro-financial implications” that could be used to form global crypto regulations.

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