India, Qatar’s Financial Intelligence Units Partner to Combat Money Laundering through Virtual Digital Assets

One of the major areas of concern for the regulators has been the misusing virtual digital assets or VDAs for money laundering since such cryptocurrencies started gathering investment interest widely. India and the UAE, two geographies witnessing remarkable growth in the VDA sector, have now become partners to discuss this particular issue. On the same note, this week, the Financial Intelligence Units of both nations met in New Delhi to finalize an agreement aimed at combating criminal entities using crypto assets for money laundering activities.

In the meeting, the FIUs of India and the UAE both acknowledged that the threat is escalating from money laundering, considering all trends are upward and that terrorist financing is being done via VDAs. Using VDAs in the financing of terrorists also poses an important issue since most transactions via crypto are not traceable and only very slightly regulated, so more and more illicit actors began exploiting these assets to move illicit funds.

“The meeting was enriching for both the sides as they discussed and touched upon various areas such as the IT systems used by respective jurisdictions, public-private partnership initiative of FIU-IND (FPAC), private- private partnership for reporting entities in India for AML/CFT strategic analysis and (the exchange of) tools used by the two FIUs,” the release detailing the meeting said.

Under the agreement, the FIU of India shall share its knowledge and experience with the management of VDA-SPs.

Since December 2023, FIU-IND has adopted a more aggressive approach in the regulation of India’s virtual digital asset (VDA) space. In December last year, 28 crypto firms had registered with the FIU in India to get operational approvals in the country. Later that month, the FIU issued show cause notices to Binance and Kraken among other crypto firms for initiating India operations without acquiring the necessary registrations.

Very soon after, even international and all crypto companies in India became mandatory to get registered with FIU-IND in order to have an operational legitimacy status within the country-establishing FIU as an approval indicator for the legitimacy status of VDA firms functioning within the Indian territory.

FIU-Qatar appreciated highly the IT system, FINNET 2.0, used by FIU-IND and stated that it is one of the most sophisticated systems used by any FIU. They showed keen interest in further understanding the Private-Private Partnership Initiative from FIU-IND which facilitates the collaboration amongst private sector players in AML/CFT regime,The FIU unit of the UAE will be working with its’ the statement noted.

Where as India is steadily inching closer to fully implementing its crypto regulations by taking the assistance of the G20, UAE has aggressively progressed towards the regulation of their country’s crypto sector valuing at $2.48 trillion that’s an approximate ₹2,08,78,724 crores.

UAE October last year exempted its country’s value-added tax on the crypto transactions occurring in the country.

This came a few days after the UAE stepped up its crackdown on illicit and financially dangerous crypto operations. The UAE had already, during the month, issued a stop order against seven crypto businesses, accusing them of carrying out their business activities in Dubai without having necessary permissions from the Virtual Assets Regulatory Authority.

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