- India’s Financial Intelligence Unit suspects cryptocurrencies are used for various felonious activities
- The report was prepared during the 2023-2024 financial year after analyzing countless questionable transaction reports
- Shady pump and dump schemes were also present
Findings from India’s Financial Intelligence Unit (FIU) indicate suspicions that cryptocurrencies are being used for illicit activities, including terrorism financing, cybercrime, narcotics trafficking, and illegal betting.
Prepared during the 2023-2024 financial year, the FIU’s report for virtual digital assets (VDAs) and their service providers (such as crypto exchanges) analyzed numerous suspicious transaction reports (STRs) from the sector.
These findings have been shared with agencies like the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and the Income-Tax Department, ultimately leading to enforcement actions in certain cases.
The report also mentions shady pump and dump schemes with fake coins, high-volume crypto transactions in illegal forex apps, and attempts to involve individuals suspected of unlawful activities.
India’s Crypto Regulation in the Spotlight
This news breaks during a time where India is crafting a regulatory framework for cryptocurrencies. While not illegal, income from cryptocurrency transactions has been taxed at a flat rate of 30% since 2022.
Therefore, the findings could impact regulations due to the FIU’s report, as suspicions may lead to heightened measures aimed at preventing the misuse of digital assets, not to mention that it may influence public perception and adoption of cryptocurrencies.
The RBI (Reserve Bank of India) has also expressed doubts about private cryptocurrencies, viewing them as a big risk to India’s economic and financial stability.
India’s Ongoing Fight Against Financial Crime
India has historically struggled with challenges related to money laundering and terrorist financing. Last year, the Financial Action Task Force (FATF), an international anti-money laundering watchdog, urged the country to speed up prosecutions in financial fraud cases.
Despite being compliant on most parameters, India was rated as moderately effective in investigating and prosecuting money laundering, with issues like court backlogs slowing down convictions.
Add cryptocurrencies to the mix and it all becomes very complicated, making the challenge of rooting out criminal activities even worse as the pseudonymous nature of digital currencies can hamper the authorities when trying to trace potentially criminal transactions.
It’s not clear how India will respond to the findings of the FIU’s report, but all this highlights the need for robust regulatory frameworks that will balance innovation with the prevention of illicit activities in the crypto industry.
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