The Financial Intelligence Unit (FIU) of India, a government body responsible for monitoring financial transactions, announced that nine international cryptocurrency exchanges, including Binance, Kraken, Kucoin, and Mexc, are functioning in India without adhering to the country’s anti-money laundering regulations.
The FIU has requested the IT Ministry to block access to these platforms’ websites.
The FIU has issued formal notices to these nine companies, emphasizing that global cryptocurrency exchanges must abide by India’s anti-money laundering norms, regardless of their physical presence in the country.
The agency highlighted that many offshore entities serving a significant number of Indian customers are not complying with India’s Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework. In India, cryptocurrencies came under the AML/CFT framework in March of this year. So far, 31 crypto firms have registered with the FIU.
A shift has been observed among Indian traders towards international crypto platforms, possibly to bypass tax regulations. India imposed a 30% tax on cryptocurrency gains and a 1% transaction fee last year.
While India-based crypto exchanges like CoinSwitch Kuber (backed by a16z), CoinDCX (backed by B Capital), and WazirX (formerly partnered with Binance) maintain strict know-your-customer (KYC) checks for new users, many international platforms do not.
This laxity has contributed to a significant drop in trading volumes on platforms like WazirX, where it has fallen by 97% over two years as traders migrate to international apps.
Other exchanges found non-compliant with Indian laws include Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex. Coinbase, meanwhile, ceased registering new users in India several months ago.
Sumit Gupta, co-founder and CEO of CoinDCX, stated that most Indian crypto exchanges are registered with the FIU and comply with the Prevention of Money Laundering Act.
He believes that the FIU IND’s recent directive to offshore Virtual Digital Assets Service Providers (VDA SPs) will contribute to risk mitigation and the creation of a secure virtual digital asset ecosystem.
Binance’s founder Changpeng “CZ” Zhao expressed last year in an interview with TechCrunch his reluctance to expand in India, citing the country’s lack of a crypto-friendly environment.
