India Blocks Binance and Other Major Offshore Exchanges Over Non Compliance

India Blocks Binance and Other Major Offshore Exchanges Over Non Compliance

The Indian finance ministry has issued compliance show-cause notices to nine offshore cryptocurrency exchanges, including major players like Binance, Kucoin, Huobi, and others, accusing them of violating Indian money laundering laws.

The ministry has given the exchanges a week to respond to the notices, after which they may face criminal prosecution.

The affected exchanges, namely Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, have been served notices to explain their non-compliance with the Prevention of Money Laundering Act (PMLA), 2002.

The exchanges have been given a deadline of 20th September to comply with the Act, or they will be shut down.

This could have a huge impact on the cryptocurrency market, as these exchanges are some of the biggest in the world.

This could have a huge impact on the cryptocurrency market, as these exchanges are some of the biggest in the world.

The ministry has also asked the information technology ministry to block the URLs of the websites that are illegally operating in the country.

Foreign Exchanges Asked to Register With FUI

The finance ministry today outlined that virtual digital asset (VDA) service providers engaged in activities such as the exchange between virtual digital assets and fiat currencies, as well as the transfer and administration of virtual digital assets, must register with the Financial Intelligence Unit-India (FIU-IND).

This is a measure to ensure that all VDA service providers are compliant with the Prevention of Money Laundering Act (PMLA) and other relevant laws.

The FIU-IND is a national agency responsible for detecting and preventing financial crimes.

They work with enforcement agencies and foreign counterparts to monitor and regulate financial activities in the country.

The FIU-IND is a crucial part of the country’s financial security.

The finance ministry has emphasized that the obligation for registration and compliance is not contingent on physical presence in India, with the regulatory framework encompassing reporting, record-keeping, and other obligations under the PMLA.

This means that even if you are not in India, you are still required to comply with the regulations set by the finance ministry.

Noncompliance can result in serious penalties, so it is important to understand and follow the regulations.

The Indian government has identified 31 registered service providers of virtual digital assets, but several offshore entities that cater to a substantial portion of Indian users have failed to comply with the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

1% TDS Not Implemented on Foreign Exchanges

As reported earlier, the implementation of 1% tax on cryptocurrency transactions in India has resulted in the loss of potential revenues of approximately $420 million (Rs. 3,493 crores) to the Indian government.

Between February 2022 and July 2022, three to five million Indian users shifted to offshore platforms, with a single offshore exchange reporting a staggering 450,000 sign-ups in the month of July alone.

This shift has been largely due to the fact that foreign exchanges do not levy any taxes on cryptocurrency transactions.

While this may be good news for Indian users looking to avoid taxation, it is resulting in a significant loss of revenue for the Indian government.

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