Money laundering laws will now cover cryptocurrency trade

Subject :Economy

Section: Msc

Concept :

In a gazette notification, the Finance Ministry said the anti-money laundering legislation has been applied to crypto trading, safekeeping and related financial services.
The government has imposed the Prevention of Money-laundering Act, 2002 on cryptocurrencies or virtual assets as it looks to tighten oversight of digital assets.

Implications

After this, Indian crypto exchanges will have to report suspicious activity to the Financial Intelligence Unit India (FIU-IND).
The move is in line with the global trend of requiring digital-asset platforms to follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers.
This means that any financial wrongdoing involving cryptocurrency assets can now be investigated by the Enforcement Directorate.

Virtual Assets

Virtual assets are digital representations of value that can be traded or transferred electronically.
They can include cryptocurrencies like Bitcoin, Ethereum, or Litecoin, as well as other digital tokens or coins that are created and exchanged using blockchain technology.
Under the Income Tax Act, virtual assets are treated as capital assets for tax purposes. This means that any gains or losses from their sale or exchange may be subject to capital gains tax, depending on the holding period and other relevant factors.

Financial Intelligence Unit – India (FIU-IND)

It was set by the Government of India on 18th November 2004 as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions.
FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and financing of terrorism.
FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC)headed by the Finance Minister.
FIU-IND is a multi disciplinary body with a sanctioned strength of 75 personnel–from different organizations namely Central Board of Direct Taxes (CBDT), Central Board of Excise and Customs (CBEC), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Department of Legal Affairs and Intelligence agencies.

For Notes on Money Laundering and PMLA, Refer – https://optimizeias.com/money-laundering/