India’s FIU Issues Notices to 25 Offshore Crypto Platforms for PMLA Non-Compliance

India’s Financial Intelligence Unit (FIU-IND) has issued notices to 25 offshore Virtual Digital Asset Service Providers (VDA SPs) for failing to comply with the Prevention of Money Laundering Act (PMLA), 2002.

Among the exchanges named are some of the industry’s best-known platforms, including Paxful, Poloniex, BitMex, BTCC, CEX.IO, LBank, CoinEx, BingX, PrimeXBT, Remitano, AscendEx, Phemex, Probit Global, Bitrue, BTSE, YouHodler, and Huione.

The FIU said these entities were catering to Indian users without registering as reporting entities, as required under Indian law. Under Section 13 of the PMLA, VDA SPs are obligated to conduct due diligence, maintain transaction records, and report suspicious activities. These obligations apply irrespective of whether the service provider is physically based in India.

In addition to the compliance notices, the FIU Director has invoked Section 79(3)(b) of the Information Technology Act, 2000 to order takedowns of websites and mobile applications of the listed entities. The platforms were found to be offering services illegally to Indian users, bypassing local regulatory requirements.

As of now, 50 VDA SPs are registered with the FIU, according to the agency. The FIU said it regularly identifies offshore platforms operating in India without registration and brings them under scrutiny.

India formally brought VDA SPs under the PMLA’s AML/CFT framework in March 2023, requiring them to register with FIU-IND. Covered activities include the exchange between fiat and virtual assets, the transfer of digital assets, safekeeping, and the administration of digital asset instruments.

Officials emphasized that these obligations are activity-based rather than jurisdiction-based—meaning any platform serving Indian customers must register and comply, regardless of whether it has offices in India.

The FIU also reiterated the risks associated with unregulated digital assets, including crypto tokens and NFTs, warning that investors may have no recourse to regulatory protection in the event of losses.

The enforcement action highlights India’s intent to tighten oversight of offshore platforms, especially as the government strengthens its AML and CFT enforcement in the digital assets sector. With major international exchanges named in the latest list, the move may trigger greater pressure on global firms to seek compliance before continuing operations in India.

While some platforms, such as Binance and KuCoin, registered earlier this year after being flagged, others have yet to fall in line. The notices issued this week suggest the FIU is prepared to escalate measures against firms that remain outside the system.

For Indian crypto users, the crackdown signals greater scrutiny of offshore platforms and a potential shift toward domestically compliant exchanges.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by the Editorial Team.

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