Crypto-funded debit card in India

FIU-IND — VDA Service Provider registration, AML/CFT, blocked 9 offshore exchanges in Jan 2024

RBI — Stablecoins, payments, Digital Rupee CBDC pilot — historically hostile to private crypto

Prevention of Money Laundering Act (amended 2023) (2023) — VDA SP registration with FIU-IND — mandatory

Finance Act 2022 (Section 115BBH) (2022) — 30% flat tax on virtual digital assets; 1% TDS on transactions above INR 50,000

VASP: VDA Service Provider registration with FIU-IND (1-3 months, no minimum capital). Offshore exchanges blocked in 2024 for non-compliance (Binance, KuCoin, etc.) — most subsequently registered. No comprehensive crypto legislation despite being 'upcoming' since 2021.

CUSTODY: No specific custody framework; covered under FIU registration. No framework for stablecoins, DeFi, or token issuance.

EXCHANGE: FIU-IND registration required; offshore exchanges blocked if non-compliant. RBI attempted outright ban in 2018 (reversed by Supreme Court 2020).

Transaction Monitoring Systems: Confirmed as a standard requirement for VASPs. Sources describe risk-based, real-time, AI-powered systems to flag suspicious activities like large transfers, structuring, or high-risk patterns, tailored to customer risk levels.

Blockchain Analytics Tools: Supported indirectly. Sources highlight blockchain monitoring (e.g., SaaS models analyzing wallets, histories, and typologies like chain-hopping or mixers) as essential for VASP compliance, often integrated with transaction monitoring.

Travel Rule Solutions: Explicitly required under FATF standards. VASPs must share originator/beneficiary details (e.g., name, account, address) for virtual asset transfers via secure channels, with screening, recordkeeping, and rejection of incomplete data.

Adopted and Effective Date: Adopted via PMLA amendment on March 7, 2023, explicitly to comply with the FATF Travel Rule by including VDA service providers (often termed VASPs) in the PMLA framework.

Threshold Amounts: No specific threshold is detailed in the provided sources for India; FATF globally recommends $1,000/€1,000, but countries like India set their own (or none), with requirements potentially applying to all transactions.

VASPs Covered: All Virtual Digital Asset Service Providers (also called VDA-SPs), now classified as reporting entities under PMLA. Several VASPs have registered with the Financial Intelligence Unit - India (FIU-IND), while non-compliant ones faced website blocks.

Technical Implementation Requirements: FIU-IND issued specific AML & CFT Guidelines for VDA-related service providers, covering transaction monitoring systems, blockchain analytics tools, and Travel Rule compliance. VASPs must adhere to these and any subsequent FIU-IND directives on implementation status.

Prevention of Money Laundering Act (PMLA), 2002 (amended March 7, 2023): Core legislation extending AML/CFT to VDAs and VASPs. https://www.ikigailaw.com/article/592/the-implementation-of-the-fatf-travel-rule-to-vasps-in-india

FIU-IND AML & CFT Guidelines for VDA Service Providers: Operational guidance post-amendment. https://fiuindia.gov.in/pdfs/downloads/VDA08012026.pdf

Screening obligations: Continuous screening of wallets, addresses, and counterparties against the Specially Designated Nationals (SDN) List (https://sanctionssearch.ofac.treas.gov), plus the 50% Rule (block entities owned ≥50% by SDN-listed persons) (https://ofac.treasury.gov/faqs/topic/1626). No crypto exceptions; includes sanctioned jurisdictions like Iran, North Korea, Syria, Cuba, Crimea/Donbas (https://ofac.treasury.gov/sanctions-programs-and-country-information).

Blocking: Immediately freeze sanctioned cryptoassets (e.g., from designated wallets/exchanges like Blender.io or SUEX) and report to OFAC; no trading/transfer allowed without license (https://www.elliptic.co/blockchain-basics/what-are-ofac-crypto-sanctions).

Penalties: Civil fines up to $1M+ per violation (e.g., Binance $3.4B in 2023 for Iran/Russia/Cuba dealings; Bittrex $24M) (https://sanctionslawyers.net/ofac-lawyers/ofac-cryptocurrency-sanctions/); criminal penalties possible. Indian VASPs risk secondary sanctions or PMLA fines up to ₹10 lakh + imprisonment.

Screening obligations: Screen against EU Consolidated Financial Sanctions List (https://data.europa.eu/data/datasets/consolidated-list-of-persons-groups-and-entities-subject-to-eu-financial-sanctions?locale=en); ≥50% ownership threshold codified in 19th Russia package (Oct 2025), banning crypto exchanges/transactions with targets like Rosneft (https://amlwatcher.com/blog/ofac-ofsi-eu-un-sanctions-screening-guide/). Sectoral bans (e.g., Russian LNG/crypto) apply.

Screening obligations: Screen against UN Consolidated List (https://www.un.org/securitycouncil/content/un-sc-consolidated-list); covers terrorists, proliferators (e.g., North Korea).

Penalties: PMLA fines (up to 3x contravention value) + 3-7 years imprisonment; FEMA violations up to 3x amount.

Evidence fact in.tax not found (may have been renamed).

Transfers and trading: Flat 30% on profits.

Section 115BBH: Flat 30% tax on VDA transfer income, no offsets/deductions beyond acquisition cost.

Section 194S: 1% TDS on VDA transfers above thresholds, effective July 1, 2022.