It has been notified by the Ministry of Finance that cryptocurrency exchanges will be “persons carrying on designated businesses or professions” within the meaning of Section 2(1)(sa) of the Prevention of Money Laundering Act, 2002. Therefore, it means that crypto exchanges will come within the definition of “reporting entity” within the meaning of Section 2(wa) of the Prevention of Money Laundering Act, 2002. As a consequence of which, the crypto exchanges should follow the norms and obligations of other reporting entities likes banks and financial institutions in relation to verification of identities of clients and for the maintenance of records.
The norms and obligations of ‘reporting entities’ are being specified in Chapter IV of the PMLA.
The Ministry of Finance issued the notification which brought the following activities under Section 2(1)(sa) of the Prevention of Money Laundering Act, 2002
(i) The exchange between the virtual digital assets and fiat currencies;
(ii) The exchange between one or more forms of virtual digital assets;
(iii) The transfer of virtual digital assets; (iv) The safekeeping or administration of virtual digital assets or the instruments which enables control over virtual digital assets; and (v) The participation in and provision of financial services which is related to an issuer’s offer and sale of a virtual digital asset.