What is FIU-IND Crypto Compliance

The Financial Intelligence Unit – India (FIU-IND) is a body under India's Ministry of Finance responsible for receiving, processing, and analysing financial intelligence related to money laundering and terrorism financing. Since March 2023, Virtual Asset Service Providers (VASPs) operating in India must register with FIU-IND and comply with the Prevention of Money Laundering Act (PMLA) obligations. THE MARCH 2023 PMLA NOTIFICATION On March 7, 2023, the Ministry of Finance issued a gazette notification bringing VASPs under PMLA — bringing India in alignment with FATF (Financial Action Task Force) Recommendation 15. VASPs are now "reporting entities" under PMLA, subject to the same obligations as banks and financial institutions. WHO MUST REGISTER WITH FIU-IND Any person or entity providing one or more of: Exchange between virtual assets and fiat currencies. Exchange between one or more virtual assets. Transfer of virtual assets on behalf of customers. Safekeeping or custody of virtual assets. Participation in ICOs or similar financial services. This includes: All crypto exchanges operating in India (domestic and offshore serving Indian users), custodial wallet providers, OTC desks, and potentially NFT platforms facilitating financial transactions. KEY COMPLIANCE OBLIGATIONS KYC (Know Your Customer): Verify identity of all customers using officially valid documents (Aadhaar, PAN, passport). Enhanced Due Diligence (EDD) for high-value customers, PEPs (politically exposed persons), and suspicious profiles. Maintain KYC records for minimum 5 years after account closure. AML/CFT Programme: Risk-based approach to identifying and monitoring money laundering and terrorism financing risks. Screen customers against UN sanctions lists and RBI caution lists. Monitor transaction patterns for suspicious activity. Suspicious Transaction Reports (STR): File STRs with FIU-IND within 7 days of identifying suspicious activity. Cash Transaction Reports (CTR): Report crypto transactions equivalent to cash above ₹10 lakh. FATF Travel Rule: For transactions above ₹50,000 (or $1,000 equivalent), transmit originator and beneficiary information to the receiving VASP. FIU-IND ENFORCEMENT In December 2023, FIU-IND issued show-cause notices to major offshore exchanges for operating without PMLA registration. Subsequently, the Indian government directed Apple and Google to block non-compliant exchange apps in India. Binance, KuCoin, and others subsequently registered with FIU-IND and resumed Indian operations.

Terms in addition to the FIU-IND Crypto Compliance

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.