India tightens cryptocurrency regulations to combat money laundering and terrorist financing

According to CoinDesk, India's Financial Intelligence Unit (FIU) has announced stricter identity verification measures for cryptocurrency exchanges to combat money laundering and terrorist financing activities.

The new regulations require exchanges to verify the authenticity and biometric features of users by having them take a blinking dynamic selfie, while accurately recording the user's geographic coordinates, time, and IP address. In addition to providing a Permanent Account Number (PAN), exchanges must also collect additional documents such as passports, driver's licenses, identity cards (Aadhaar card), or voter ID cards, as well as mobile phone numbers and email addresses, which will be confirmed via one-time passwords (OTPs). Ownership of user bank accounts will be verified through a "small credit verification" method, while high-risk customers or those associated with tax havens, jurisdictions related to the Financial Action Task Force (FATF), or potential risk exposure individuals or non-profit organizations will need to undergo enhanced due diligence every six months.

Exchanges are prohibited from supporting ICOs and from using tools like mixers to obscure transaction trails, making cryptocurrencies untraceable. All platforms must register with the Financial Intelligence Unit, report suspicious transactions, and retain user data for five years. The guidelines indicate that initial coin offerings and initial token sales lack reasonable economic justification and pose "higher and more complex" risks of money laundering and terrorist financing.