In a significant move to tighten the regulatory framework on virtual digital assets (VDA), the Government of India has sent formal notices to 25 offshore cryptocurrency exchanges for allegedly violating the country’s anti-money laundering laws. The Financial Intelligence Unit of India (FIU-IND), under the Finance Ministry, issued these notices under Section 13 of the Prevention of Money Laundering Act (PMLA).
Regulatory Actions Under PMLA
Section 13 of the PMLA empowers authorities to investigate entities suspected of money laundering activities, access company records, verify customer details, and demand reports on suspicious transactions. The government has warned that breaches of rules could attract fines of up to Rs 1 lakh per violation.
Among the 25 offshore exchanges that have received notices are notable names such as CoinW (Singapore), BTCC (UK), Changelly (Hong Kong), and Paxful (US). Other affected firms include Huione (Cambodia), CEX.IO (US and UK), LBank (British Virgin Islands), PrimeXBT (Saint Lucia), Coinex (Hong Kong), Remitano (Singapore), Poloniex (Boston), BitMex (Seychelles), and LCX (Liechtenstein).
Mandatory Registration and Compliance
Despite several Virtual Digital Asset Service Providers registering with FIU-IND—currently totaling 50—the government reported that numerous offshore players continue to operate without registration. This non-compliance keeps them outside the purview of India’s anti-money laundering and counter-financing of terrorism (AML-CFT) regulations, raising concerns over transparency and security.
To address this, the government made it clear that every VDA service provider offering services to Indian users must register with FIU-IND and adhere to PMLA provisions. This directive applies regardless of the provider’s physical presence in India and covers activities such as crypto-to-fiat exchanges, asset transfers, digital asset safekeeping, or any service granting control over such assets.
Steps Beyond Notices: URL Blocking and IT Act Enforcement
In addition to the FIU notices, separate actions under the Information Technology Act, 2000, are underway. The government has instructed the removal of apps and websites of entities operating in India without proper registration, enhancing enforcement through digital platform restrictions.
Risk Warning on Crypto Products and NFTs
The Finance Ministry further cautioned Indian users about the high risks associated with crypto products and non-fungible tokens (NFTs), noting their current unregulated status. Investors are reminded that these assets lack regulatory protection, and any losses incurred through such transactions would not receive compensation or legal recourse.
Strengthening AML-CFT Framework in India
This regulatory push aligns with India’s broader strategy to enforce stringent AML-CFT measures in the VDA sector, which saw a formal inclusion within this framework in March 2023. The government’s intensified scrutiny aims to plug compliance gaps and prevent illicit activities through cryptocurrencies.
Impact on Offshore Crypto Exchanges
The notices have triggered reactions within the crypto sector, highlighting the government’s resolve to police foreign entities influencing Indian markets. With the looming risk of fines and operational restrictions, offshore exchanges face mounting pressure to adhere to Indian AML norms, including rigorous KYC protocols and monitoring of suspicious transactions.
Looking Ahead: Regulatory Vigilance
India’s focus on enforcing AML laws on crypto exchanges—domestic and offshore alike—signals a robust intent to secure the financial ecosystem. The FIU’s ongoing efforts to bring all service providers under strict surveillance ensure more transparency and accountability in virtual asset transactions.
AML Editor’s article was originally published in indianews on October 2, 2025