Guidelines for Virtual Digital Assets:
The Financial Intelligence Unit–India (FIU-IND) has introduced stringent new Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines for Virtual Digital Assets (VDAs) service providers to curb financial crimes in India’s cryptocurrency ecosystem.
New FIU-IND Guidelines for Virtual Digital Assets:
- Mandatory live selfie with liveliness detection (eye-blink/head movement) and geographic tracking (latitude, longitude, timestamp, IP) during user onboarding to prevent static/deepfake fraud.
- Requires PAN + secondary ID (Aadhaar/Passport/Voter ID), OTP verification for email/mobile, and “penny-drop” bank account confirmation via a Rs 1 transaction.
- KYC updates every 6 months for high-risk clients and annually for others; enhanced due diligence for entities linked to tax havens, FATF grey/black lists, politically exposed persons (PEPs) or non-profit organisations (NPOs).
- Strongly discourages Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs) and prohibits facilitation of anonymity-enhancing crypto tumblers and mixers.
- Crypto tumblers and mixers are services that enhance transaction privacy by pooling and scrambling funds from multiple users, then redistributing them to break the traceable link on the public blockchain ledger.
- Crypto exchanges must register as PMLA reporting entities, maintain 5-year client/transaction records, and report suspicious transactions to the FIU.
- A cryptocurrency exchange is a digital platform that allows users to buy, sell, and trade cryptocurrencies for other digital assets or traditional fiat money. E.g., Coinbase.
