India and Qatar’s FIUs are working together against money laundering activities through VDAs
Misuse of virtual digital assets (VDAs) for money laundering has been one of the biggest concerns for regulators worldwide since cryptocurrencies began attracting widespread investor interest. India and the UAE, two regions where the VDA sector is growing significantly, have now joined forces to tackle this problem. This week, the Financial Intelligence Units (FIUs) of both countries met in New Delhi to finalize an agreement aimed at combating the illegal use of crypto assets by criminal entities for money laundering.
During the meeting, the FIUs of India and the UAE recognized the growing threat posed by money laundering, with evidence pointing to an increase in such activities. Another critical issue addressed was the use of virtual digital assets (VDAs) in terrorist financing. Due to the largely untraceable and still relatively unregulated nature of crypto transactions, illicit actors are increasingly exploiting these assets to move illicit funds.
“The meeting was enriching for both sides as they discussed and touched on various areas such as the IT systems used by the respective jurisdictions, the FIU-IND Public-Private Partnership Initiative (FPAC), the Private-Private Partnership for Reporting entities in India for AML/CFT strategic analysis and (the exchange of) tools used by the two FIUs,” said the press release detailing the meeting.
Under the agreement, India’s FIU will share its expertise and insights on managing virtual digital asset service providers (VDA-SPs).
Since December 2023, FIU-IND has taken a more active role in regulating virtual digital assets (VDA) in India. As of December last year, 28 crypto companies had registered with the FIU in India to obtain operational approvals in the country. Later that month, the FIU issued show-cause notices to Binance and Kraken and other crypto companies for initiating operations in India without obtaining the necessary registrations.
Soon after, all crypto companies, both domestic and international, were required to register with the FIU-IND to obtain legal operating status in India, establishing the FIU’s approval as a mark of legitimacy for VDA companies in the country .
“FIU-Qatar highly appreciated the IT system used by FIU-IND (FINNET 2.0) and mentioned that it is one of the most advanced systems used by any FIU. They expressed their desire to further understand FIU-IND’s Private-Private Partnership Initiative, which facilitates cooperation between private sector players in the AML/CFT regime. The UAE FIU unit will work with her,” the statement said.
While India has taken a more gradual approach in finalizing its crypto regulations in collaboration with the G20, the UAE has moved quickly to regulate its crypto sector, which is currently valued at $2.48 trillion (approximately ₹2,08,78,724 crore).
In October, the UAE removed the value-added tax on crypto transactions.
The UAE FIU meeting comes just days after the country began to intensify its crackdown on illegal and financially risky crypto activities. Earlier that month, Dubai’s Virtual Assets Regulatory Authority (VARA) issued a cease and desist order against seven crypto entities for operating without the necessary approvals.
