Crypto Exchanges

• Context (TH): FIU issued Binance and other crypto exchanges with show-cause notices.

Financial Intelligence Unit (FIU)

• FIU was established in 2004 as an anti-money laundering unit under the Finance Ministry.
• It investigates monthly Cash transaction reports, Suspicious transaction reports and Cross-border wire transfer reports under the Prevention of Money Laundering Act, 2002 (PMLA).
• Suspicious or doubtful transactions are shared with agencies like the Enforcement Directorate, the Central Bureau of Investigation and the Tax Authority.

Crypto Exchanges in India

• A cryptocurrency exchange works similarly to stock exchanges, which helps investors buy and sell in digital currencies such as Bitcoin, Ethereum, or Tether.
• These platforms work on digital marketplaces such as mobile apps or via desktop functions.
• India will block URLs of 9 offshore exchanges, including Binance, after issuing ‘Show Cause’ notices.
• The Finance Ministry mandated that crypto businesses register with the FIU and comply with the PMLA.
• Crypto businesses will become legally obligated to perform Know Your Customer (KYC).
• The obligation is activity-based and not physical presence-based.