10/03/2023
*Cryptocurrency Exchanges are reporting entities under PMLA: Notification*
As per the Ministry of Finance Notification dated 7th March, 2023, 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.
The crypto exchanges will come within the definition of "reporting entity" within the meaning of Section 2(wa) of the PMLA. As a consequence, 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, maintenance of records etc.
The obligations of "reporting entities" are specified in Chapter IV of the PMLA.
The notification issued by the Ministry of Finance brought the following activities under Section 2(1)(sa) of the PMLA :
(i) exchange between virtual digital assets and fiat currencies;
(ii) exchange between one or more forms of virtual digital assets;
(iii) transfer of virtual digital assets;
(iv) safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and
(v) participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.
