TLDR:
- FIU-IND has issued notices to 25 offshore crypto firms under PMLA for AML rule breaches.
- Firms like CoinW, CEX.IO, and Paxful face potential fines up to Rs 1 lakh per violation.
- Separate orders under IT Act 2000 seek removal of unregistered crypto apps and websites in India.
- Regulators warned that all crypto firms must register with FIU-IND, even without a physical office.
India has turned its attention to offshore crypto companies serving local users. Regulators are pressing down harder on compliance, warning that the rules are no longer optional.
The Financial Intelligence Unit (FIU-IND) is now targeting firms that skipped registration. That includes those running exchanges and wallets without approval. The push signals a wider clean-up in the country’s digital asset market.
FIU Notices Put Offshore Crypto Firms on Alert
The Finance Ministry confirmed that FIU-IND sent formal notices to 25 offshore crypto service providers.
The notices were filed under Section 13 of the Prevention of Money Laundering Act (PMLA). That section allows authorities to review records, verify client details, and demand reports on suspicious activity.
The penalties are clear. Each violation could cost up to Rs 1 lakh, according to the ministry’s statement.
Exchanges and custodial services operating without registration face the risk of forced shutdown. Offshore platforms including CoinW, CEX.IO, BTCC, Paxful, and LBank are among those flagged.
In addition to PMLA actions, separate orders under the Information Technology Act, 2000, targeted apps and websites. These notices direct removal of platforms not registered with the FIU. That step aims to limit user access to non-compliant operators inside India.
The FIU, created in 2004, tracks and analyzes suspicious transactions across sectors. Reports confirm that 50 service providers have registered so far. But many offshore firms continue operations in India without meeting compliance requirements.
India’s Push for AML Compliance in the Crypto Market
Officials said all virtual digital asset providers serving Indian customers must register with the FIU. This applies even when companies have no physical base inside the country.
Covered services include crypto-to-fiat exchanges, custody solutions, and wallet operators. Any provider giving users control over digital assets must meet compliance.
The rules extend to transfers and any activity linked to money flows. FIU stressed that compliance is not optional and applies equally to domestic and foreign platforms. Those ignoring the mandate risk financial penalties and removal of their services in India.
The Finance Ministry also issued a warning to retail users. It said cryptocurrencies and non-fungible tokens remain outside regulatory protection. Investors were reminded that any losses in digital asset markets carry no legal safeguards.
This enforcement move highlights India’s effort to tighten oversight of crypto markets. By targeting offshore firms, regulators are setting clearer boundaries for compliance.