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Crypto-transactions or virtual assets are now under the ambit of money laundering laws

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Cryptocurrency transactions would now be considered under the realm of money laundering provisions, announced the Finance Ministry on Wednesday. The Government mentioned in a notification that any type of transactions involving virtual digital assets would be deemed under the Prevention of Money Laundering Act (PMLA). This step initiated by the Government had been undertaken to tighten oversee of digital assets.

The Ministry cautioned the investors in the gazette against taking part in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset. Transfer and exchange of virtual assets would also be considered under PMLA laws, the notification quoted. Indian crypto exchanges would report any  suspicious activity to the Financial Intelligence Unit India (FIU-IND). Virtual digital asset is referred by the Income tax act as ‘any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means with the promise or representation of having inherent value.’

The Enforcement Directorate has mandate to inquire forex violation cases and money laundering. It has  started to examine crypto companies which further includes exchanges CoinSwitch Kuber and WazirX.  Finance Minister Nirmala Sitharaman briefed Parliament last month regarding the discussion of India  with the G-20 member countries in respect to the need to generate a standard operating protocol for managing crypto assets. She had further brought a 30% tax on income from transactions in such assets in the Budget for 2022-23. Moreover, she initiated a 1% tax deduction at source (TDS) on transactions in such assets above a certain threshold to bring such assets under the tax net.

The latest step initiated by India lined up  with the global trend of the need of digital-asset platforms which follows anti-money laundering standards which are further similar to those chased by other entities like banks or stock brokers,  reported by a source.

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