India’s Ministry of Finance issued new directives on March 10, 2023, mandating that all cryptocurrency exchanges operating within the country register with the Financial Intelligence Unit (FIU) and comply with full AML and CTF reporting obligations. The directive aligns India’s digital asset oversight with global standards laid out by the FATF.

The new rules require exchanges to conduct Know Your Customer (KYC) verifications, file Suspicious Transaction Reports (STRs), and maintain detailed records of user activity for five years. Additionally, the regulations require ongoing monitoring of wallet addresses and transaction patterns for signs of illicit activity.

These mandates come amid growing concern over the use of crypto for tax evasion, capital flight, and illicit trade. The FIU has already issued warnings to several non-compliant platforms and is working with other regulators to enforce licensing requirements.

Crypto firms operating in India now face a stricter compliance landscape. Those unable to meet these standards may be forced to shut down or relocate operations. Compliance professionals should prioritize the establishment of internal AML programs tailored to Indian regulations, train staff, and invest in tools that can automate KYC and transaction monitoring.

India’s directive represents a maturing approach to crypto regulation, signaling that governments are prepared to support innovation—provided it is anchored in strong compliance frameworks.

Source: AML & CFT Guidelines For Reporting Entities Providing Services Related To Virtual Digital Assets dated 10th March 2023
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