India Implements Stricter AML and KYC Norms for Cryptocurrency Exchanges
India has moved to tighten its grip on cryptocurrency trading, with the Financial Intelligence Unit (FIU) under the Finance Ministry rolling out stringent new Anti-Money Laundering (AML) and Know Your Customer (KYC) norms for crypto exchanges operating within the country. These updated guidelines aim to enhance security and combat illicit financial activities.
Under the revised framework, users are now required to complete a live selfie verification featuring liveness detection, specifically designed to prevent the use of static images and deepfakes. Crypto exchanges must also implement geo-tagging during user onboarding, recording latitude, longitude, IP address, and timestamps.
Mandatory penny-drop verification for bank accounts has been introduced, alongside the submission of a Permanent Account Number (PAN) and a secondary government identification such as Aadhaar, a passport, or a voter ID. Email and mobile One-Time Password (OTP) verifications are also compulsory.
The FIU has issued warnings against high-risk activities, including Initial Coin Offerings (ICOs), privacy tokens, mixers, and tumblers, citing serious concerns regarding money laundering and terror financing.
Exchanges are now mandated to preserve user data for a minimum of five years, with high-risk clients subject to more frequent KYC reviews. While India does not recognise cryptocurrency as legal tender, it is subject to taxation and will now be more closely tracked.