What is Ronda: Indian government tightens cryptocurrency regulations, new developments in anti-money laundering measures

India’s financial regulators are significantly tightening controls over cryptocurrencies to combat money laundering and terrorist financing. According to a report by PANews on January 12, India’s Financial Intelligence Unit (FIU) announced groundbreaking new regulations for trading platforms. These regulations concretize the fight against financial crimes, which are essential to understanding what money laundering (ML) is.

Preventing Money Laundering through Strict Identity Verification

The core of the new regulations lies in substantially strengthening user authentication. Exchanges are required to mandate users to take blinking selfies to verify authenticity and vital signs. At the same time, precise records of geographic coordinates, timestamp, and IP address must be maintained. These measures are part of a multi-layered identity verification system designed to counter ML.

Furthermore, users must submit the following documents: Permanent Account Number (PAN), passport, driver’s license, Aadhaar card, voter ID, mobile phone number, and email address. These multiple forms of identification are authenticated via one-time passwords (OTP), and ownership of bank accounts is verified through a “small amount inflow confirmation” method.

Enhanced Measures and Prohibitions for Exchanges

The new regulations also impose stricter restrictions on platform operators. Support for ICOs is prohibited, and the use of tools like coin mixers to evade tracking is banned. These measures aim to eliminate activities that could facilitate money laundering.

Additionally, high-risk customers, clients related to tax havens, customers from jurisdictions under the Financial Action Task Force (FATF), and non-profit organizations are subject to enhanced due diligence reviews every six months. This establishes a continuous monitoring system.

Registration, Reporting, and Data Retention Obligations

All trading platforms are now required to register with the Financial Intelligence Unit (FIU). They must also report suspicious transactions, and user data must be retained for at least five years. These measures enable authorities to track and verify ML activities.

According to Indian authorities, schemes like ICOs lack economic justification and pose higher risks of sophisticated money laundering and terrorist financing. The strengthened regulations are part of a comprehensive strategy to understand and counteract ML, and they are certain to have a significant impact on the cryptocurrency industry.