India tightens scrutiny on crypto exchanges: Blink selfies, geolocation, and multi-factor authentication all implemented

【Chain Wen】The Indian Financial Intelligence Unit (FIU) recently released a tough set of new regulations targeting cryptocurrency exchanges. These regulations are not just a simple KYC upgrade but involve the full suite of identity verification tools.

First, biometric verification. Exchanges require users to record a selfie blinking action to prevent AI face swapping or photo forgery. At the same time, they must precisely record the user’s GPS coordinates, timestamp, date, and IP address — in other words, the platform must know exactly where and when you log in.

Regarding document requirements, it’s even more comprehensive. In addition to a Permanent Account Number (PAN), users must submit at least one of the following: passport, driver’s license, Aadhaar card, or voter ID. Phone numbers and email addresses must also be verified via one-time passwords. Ownership of bank accounts is verified through the “small deposit verification” method — a few rupees are deposited into your account, and successful withdrawal proves the account is genuine.

For high-risk customers, the rules are stricter. Any tags such as tax havens, FATF concern countries, potential risk exposure individuals, or non-profit organizations require enhanced due diligence, which must be conducted every six months.

The red lines for exchanges are also clearly defined: supporting ICOs is prohibited, and mixers or other anonymizing tools are banned. All platforms must register with the FIU, proactively report suspicious transactions, and user data must be retained for at least five years.

The FIU’s reasoning is straightforward — initial coin offering projects inherently lack economic backing, and the risks of money laundering and terrorist financing are higher and more complex. This comprehensive approach significantly increases compliance costs but also greatly enhances risk prevention and control.