India Strengthens AML Framework for Virtual Digital Assets
India has reinforced its regulatory oversight of virtual digital assets (VDAs) by updating anti–money laundering (AML) and counter–terror financing (CFT) norms. The move, led by the Financial Intelligence Unit – India under the Ministry of Finance, reflects a sharper risk-based approach toward cryptocurrencies, particularly those designed to preserve user anonymity.
Key Changes in the Updated Guidelines
Issued on January 8, the revised FIU-IND guidelines lay down clearer expectations for crypto exchanges and other VDA service providers. They detail organisational accountability, operational readiness, reporting obligations, and internal compliance mechanisms. The objective is to align India’s crypto supervision with global AML/CFT standards while addressing risks specific to the domestic financial system.
Anonymity-Enhancing Tokens Classified as High Risk
A major shift in the framework is the classification of anonymity-enhancing tokens as “unacceptably high risk”. FIU-IND has directed reporting entities not to allow deposits or withdrawals involving VDAs that obscure transaction origin, ownership, or value. Similar restrictions apply to crypto mixers, tumblers, and services that deliberately obfuscate transaction trails. Entities must deploy monitoring systems to detect and immediately block such activities.
Tighter Controls on Wallet Transactions
The guidelines place special scrutiny on self-custody or unhosted wallets, which regulators view as more vulnerable to misuse. Where at least one wallet is hosted, complete originator and beneficiary details must be collected. For peer-to-peer or unhosted wallet transactions, entities may impose additional restrictions or prohibitions based on internal risk assessments.
Exemptions and Cybersecurity Requirements
The Digital Rupee (e₹), India’s central bank digital currency, is explicitly excluded from the guidelines. Reporting entities must also undergo periodic cybersecurity audits by CERT-In–empanelled auditors, covering governance, access controls, AML systems, and incident response preparedness.
Key Facts for Exams
-
Anonymity-enhancing crypto tokens are classified as high ML/TF risk
-
Crypto mixers and tumblers are restricted under FIU-IND norms
-
Unhosted wallets face stricter scrutiny
-
Digital Rupee (e₹) is exempt from these guidelines
Month: Current Affairs - January 10, 2026
Category: Financial Regulation