The Government Has Bought Virtual Digital Asset (VDA) Transactions Under Prevention Of Money Laundering Act (PMLA)


In its rearmost step to strain oversight of digital means, the Centre has brought crypto trading, keeping and affiliated fiscal services under the dimension of the Prevention of money Laundering Act. The Union finance ministry issued a  review announcement to this effect. In other words, trading crypto for  edict currencies, swapping one crypto with another and transferring VDAs between two persons or legal realities is to be considered under the vittles of the money laundering act.  

The announcement has also brought crypto exchanges within the description of ‘reporting  reality’ within the meaning of Section 2 (wa) of the PMLA. The Section defines a reporting  reality as “a banking company, fiscal institution, conciliator or a person carrying on a designated business or profession,”  inferring that all similar realities working with crypto, NFTs and other VDAs would be included. Crypto exchanges will now have to maintain records and present them to the government as and when needed.  Explaining this, Mohnish Wadhwa, CEO of a business consulting establishment CapDeck Advisors, said, “With this, VDA realities now covered as a reporting reality, which means exchanges, custodians or directors of VDAs handling client finances will have to take care of PMLA laws as much as banks do and report suspicious deals”.

Though this is a step towards regulating the space, in absence of controllers, the enforcement agencies will directly take expedient of this correction. Unlike banks, where there are controllers who have specified rules to misbehave to, for being biddable with PMLA conditions, the VDA exchanges have been  counting on stylish practices to make sure these are taken care of, he added. Also, Nischal Shetty, Author of WazirX, in a tweet said that it’s a good step towards regulating crypto assiduity in India. “This also ensures that all crypto businesses must perform necessary KYC, sale monitoring, etc as a part of their process,” he added.