The Financial Intelligence Unit of India (FIU-Ind) has flagged suspicious crypto transactions for terror financing, fuelling secessionist activities, cybercrime, narcotics trafficking apart from illegal betting and gambling.
The typologies report for the virtual digital assets (VDAs) and their service providers (crypto exchanges) was prepared by the Financial Intelligence Unit (FIU) after conducting “operational analysis” of suspicious transaction reports (STRs) having financial and national security implications.
The report was shared with “credible" intelligence on the operations of cryptocurrency to ED, CBI and the Income-Tax Department for further enforcement action.
The classified report on trends analysis found that VDAs and cryptocurrency were involved in Child Sexual Abuse Material (CSAM), terror financing, narcotics trafficking, betting and gambling activities using mule accounts at Indian crypto exchanges through VPN (virtual private network) receiving high volume deposits from un-hosted and offshore exchanges and laundering of cybercrime funds.
The Reserve Bank of India (RBI) too has highlighted the abuse of private crypto assets and a major threat to the macro-economic and financial stability of the country.
The federal financial intelligence agency has stated in its report about the suspicion of high-volume cryptocurrency, hawala and online gaming-related transactions by persons based in "sensitive" regions allegedly for terror and secessionist activities, money laundering through cryptocurrency by persons of origin from "sensitive" foreign countries apart from the existence of "illegal" and "unregistered" online Virtual Digital Asset Service Providers (VASP) or crypto exchanges.
It has further flagged 'pump and dump' schemes involving fake coin and crypto tokens, high volume of crypto transactions involved in running illegal forex applications and attempts to onboard persons suspected to be involved in unlawful activities in sensitive regions.
The FIU-IND concluded that VDAs like Bitcoin, Tron and Stable coins (USDT/TRC-20) are very "widely" used by “illicit actors” because of their widespread acceptability and stability in value with offshore VDA service providers and un-hosted/un-identified wallets used to launder the proceeds of crime.
The Central Economic Intelligence Bureau (CEIB), another agency under the Union finance ministry like the FIU, has also submitted a report on VDAs to the government last year recommending a regulator for the crypto sector in the country.
