According to a report from Reuters, the government of India has decided to introduce money laundering provisions in the crypto sector. The Finance Ministry released a notice on Tuesday stating that the anti-money laundering legislation shall be applied to crypto trading, safekeeping, and other financial services.

The notification released by the government lacked details. Still, the Prevention of Money Laundering Act mandated that financial institutions should maintain records of all transactions in the past ten years.

The financial institution must provide these records to the regulators if needed. These records must be verified, and the financial institutions must identify all the clients.

This marks India’s most recent step towards ensuring a strict oversight of digital assets. This step has been taken to align itself with a global practice that demands crypto platforms to “follow anti-money laundering standards similar to those followed by other regulated entities like banks or stock brokers,” as mentioned by Jaideep Reddy, counsel at law firm Trilegal.

India’s apprehension regarding crypto resulted in stringent tax rules imposed on the crypto sector, including heavy taxation levied on crypto trading.

India’s move to impose such draconian policies on the industry is also partly responsible for the substantial drop in trading volumes in the country. The anti-money laundering step could be difficult to implement as the requisite compliance measure will most likely need more time and resources, as mentioned by Reddy.

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