India’s FIU issued revised AML/CFT guidelines for crypto services, mandating selfies with liveliness detection, geolocation data, and penny-drop bank-account verification during onboarding. The directives discourage ICOs and ITOs and constrain anonymity-enhancing tokens, tumblers, and mixers. The FIU is the single-point regulator for crypto exchanges operating under the Prevention of Money Laundering Act (PMLA). The guidelines require all exchanges to register with FIU as reporting entities, file regular reports on suspicious transactions, and maintain client records to mitigate AML/CFT risks.
Exchanges must mandatorily obtain PAN, a live selfie, onboarding coordinates with date and timestamp, and the user’s IP address as part of client due diligence. They must verify that the credential holder is the same person who initiates the account through live photographs and liveliness detection. The penny-drop method involves a refundable Rs 1 credit to authenticate the bank account. High-risk clients require enhanced due diligence and periodic KYC updates, and exchanges must retain client IDs, addresses, and transaction details for at least five years and until investigations are closed.
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