India tightens cryptocurrency regulations to combat money laundering and terrorist financing

CoinVoice has learned that, according to CoinDesk, India’s financial intelligence agency (FIU) has announced stricter identity verification measures for cryptocurrency exchanges to combat money laundering and terrorist financing activities. The new regulations require exchanges to verify users’ authenticity and liveliness by having them take a dynamic selfie with blinking, while precisely recording users’ geographic coordinates, time, and IP address. In addition to providing a permanent account number (PAN), exchanges must collect additional documents such as passports, driver’s licenses, Aadhaar cards, or voter IDs, as well as mobile phone numbers and email addresses, which will be verified through one-time passwords (OTPs). Ownership of users’ bank accounts will be authenticated via “small deposit verification,” and high-risk customers, or those associated with tax havens, jurisdictions related to the Financial Action Task Force (FATF), or potential risk exposure, or non-profit organizations, will be required to undergo enhanced due diligence every six months. Exchanges are prohibited from supporting ICOs or using tools like mixers to obscure transaction traces, making cryptocurrencies untraceable. All platforms must register with the Financial Intelligence Unit, report suspicious transactions, and retain user data for five years. The guidelines point out that initial coin offerings and initial coin fundraising lack reasonable economic justification and pose “higher and more complex” risks of money laundering and terrorist financing.