Crypto assets are by definition borderless and require international cooperation to avoid regulatory arbitrage. Union Finance Minister Shri Pankaj Chaudhary said this in a written reply to a question in the Lok Sabha today. Therefore, the Minister said that any legislation to regulate or ban can only be effective with significant international cooperation in assessing risks and benefits and developing a common taxonomy and standards.
Crypto exchanges found money laundering:
The minister said that the Directorate of Law Enforcement is investigating several cases related to cryptocurrency scams, where several crypto exchanges were also found to be involved in money laundering. The Enforcement Directorate has taken necessary action under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA).
As on 31.01.2023, the income from criminal activity was Rs. 936 crores have been attached/seized/frozen, 05 persons have been arrested and 06 charge complaints (PCs) including 01 supplementary PCs have been filed in these cases before the Special Court, PMLA.
Further, the Minister stated, under the Foreign Exchange Management Act, 1999 (FEMA), assets of Rs. 289.28 million has been seized under Section 37A of FEMA and 01 Show Cause Notice against cryptocurrency exchange Zanmai Labs Pvt Ltd, known as WazirX and its directors under FEMA for transactions involving cryptocurrency dealing of Rs. 2,790 million crowns were also issued.
Giving further information, the minister said that the RBI has been warning users, holders and traders of virtual currencies (VCs) through public notices dated 24 December 2013, 1 February 2017 and 5 December 2017 that trading in virtual currencies is associated with potential economic, financial, operational, legal, customer and security risks.
The RBI, vide its circular dated 31 May 2021, has also advised its regulated entities to continue to carry out customer due diligence processes for VC transactions, in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML ), Countering Financing of Terrorism (CFT), obligations under Prevention of Money Laundering Act (PMLA), 2002 etc. besides ensuring compliance with relevant provisions of Foreign Exchange Management Act (FEMA) for overseas remittances.
