Crypto Trade within PMLA Ambit

Subject: Economy

Section: Msc

Concept:

In order to regulate the crypto market, the Ministry of Finance announced that all virtual digital assets (VDAs) will come within the ambit of the Prevention of Money Laundering Act, 2002 (PMLA).
In July 2022, it was reported that the Enforcement Directorate recorded approximately 5422 cases, attached proceeds of nearly₹104702 crore, and filed Prosecution Complaints in almost 992 cases resulting in the confiscation of about ₹869.31 crores. It also convicted 23 accused persons under PMLA (Till March 2022).

Details about the move:

As per the notification, Indian crypto exchanges will have to report any suspicious activity associated with cryptocurrency to the Financial Intelligence Unit – India (FIU-IND).
FIU-IND is responsible for receiving, processing, analyzing, and disseminating information on suspicious financial transactions to law enforcement agencies and overseas FIUs.
According to Sections 5 and 8(4) of the PMLA Act, the ED has discretionary powers to search and seize suspected property without any judicial permission.

Ways to track money laundering via crypto transactions:

It should be noted that the technical nature of VDAs poses a new challenge and would require the intelligence unit to expand its intelligence framework.
The Egmont group suggests the appropriate analysis of crypto wallets, their associated addresses and blockchain records, and hardware identifiers like IMEI (International Mobile Equipment Identity), IMSI (International Mobile Subscriber Identity), or SEID (Secure Element Identifier) numbers, along with the MAC addresses.

Scenario in other countries:

As per the PwC’s ‘Global Crypto Regulations Report 2023’, many countries across the world are at different stages of drafting similar regulations.
Many countries like Singapore, Japan, Switzerland, and Malaysia have laws on regulatory frameworks and the U.S., U.K., Australia, and Canada are also working in this direction.
China, Qatar, and Saudi Arabia have issued a blanket ban on cryptocurrency.
The European Union is also working on a cross-jurisdictional regulatory and supervisory framework for crypto-assets.