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India’s Financial Intelligence Unit suspects cryptocurrency is used for various felonious acts
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The report was created during the 2023-2024 fiscal year after analyzing countless questionable transactions reports
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Pump and dump schemes are also prevalent
The Financial Intelligence Unit of India (FIU) has found that there are suspicions about the use of cryptocurrencies for illicit activities such as terrorism financing, cybercrime and narcotics trafficking.
The FIU’s report on virtual digital assets (VDAs), their service providers (such crypto exchanges), and their service providers during the 2023-2024 fiscal year analyzed a number of suspicious transaction reports (STRs).
These findings were shared with agencies such as the Enforcement Directorate (ED), Central Bureau of Investigations (CBI), Income-Tax Department and ultimately led to enforcement actions in some cases.
The report also mentions shady Pump and Dump schemes with fake coins, large-volume crypto transactions on illegal forex apps, as well as attempts to involve individuals suspected for unlawful activities.
India’s Crypto Regulation in the Spotlight
This news comes at a time when India is drafting a regulatory framework to regulate cryptocurrencies. Although not illegal, income derived from cryptocurrency transactions is taxed at 30% since 2022.
The FIU report could have an impact on regulations, as suspicions can lead to increased measures aimed at preventing misuse of digital assets. Not to mention, it may influence the public perception and adoption.
The Reserve Bank of India (RBI) has also expressed concerns about private cryptocurrencies. They view them as a major risk to India’s financial and economic stability.
India’s ongoing fight against financial crime
India has always struggled to deal with money laundering and terrorist funding. Last year, the Financial Action Task Force, an international anti-money-laundering watchdog, urged India to speed up prosecutions of financial fraud cases.
India, despite being compliant in most areas, was rated as a moderately effective country when it came to investigating and prosecuting money-laundering, with court backlogs and other issues slowing down convictions.
The challenge of tracing criminal activity is made even more difficult by the use of digital currencies, which are pseudonymous.
India’s response to the FIU report is not yet clear, but it highlights the need for robust regulations that balance innovation and the prevention of illicit activity in the crypto industry.
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