Lok Sabha Question No. 162 (STARRED), answered on 2023-03-13
Subject: Misuse of Crypto-currency
Ministry: FINANCE
Asked by: P. Velusamy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA STARRED QUESTION NO. *162

## TO BE ANSWERED ON MONDAY, THE 13 TH  MARCH, 2023 PHALGUNA 22, 1944 (SAKA)

## Misuse of Crypto-Currency

## *162. SHRI VELUSAMY P.:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has taken note of the fact that the Financial Action Task Force has issued warning that crypto-currencies are increasingly being resorted to for money laundering, criminal activities, terror funding to avoid detection by any regulatory law enforcement agency and if so, the details thereof;
- (b) whether the Government is aware of the fact that crypto-currency has been used for money laundering;
- (c) if  so,  the  estimated  amount  of  money  laundered  as  detected  by  different agencies entrusted with monitoring of money laundering; and
- (d) whether  the  Reserve  Bank  of  India  is  having  any  control  over  monitoring  the crypto-currency?

## ANSWER

## THE MINISTER OF FINANCE (SMT. NIRMALA SITHARAMAN)

- (a) to (d): A statement is laid on the Table of the House.

## Statement referred to in parts (a) to (d) of the Lok Sabha Starred Question No. *162  for  answer  on  13.03.2023  regarding    'Misuse  of  Crypto-Currency'  by  Shri VELUSAMY P.

(a) The FATF Plenary discussed and adopted amendments to the FATF Standards to  respond  to  the  increasing  use  of  virtual  assets  for  money  laundering  and  terrorist financing at the request of the G20 Ministers. This includes an amendment to the FATF Recommendations and glossary to clarify to which businesses and activities the FATF requirements apply in the case of virtual assets. Exchanges and wallet providers will be required  to  implement  AML/CFT  controls,  and  to  be  licensed  or  registered  and supervised or monitored by national authorities. Strengthening the standards is part of a comprehensive approach that the FATF has developed to prevent the misuse of virtual asset activities for money laundering and terrorist financing.

(b) & (c) Enforcement Directorate is investigating several cases under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) and Foreign Exchange Management Act, 1999 (FEMA) related to crypto-currencies. As on date, proceeds of crime amounting to Rs. 953.70 crores have been attached/seized/freezed, 05 persons have been arrested and 06 Prosecution Complaints (PCs) including 01 supplementary PC  have  been  filed  before  the  Special  Court,  PMLA  in  these  cases.  Further,  under Foreign  Exchange  management  Act,  1999  (FEMA)  assets  amounting  to  Rs.  289.28 crores have been seized under section 37 A of FEMA and 01 Show Cause Notice to crypto-currency  exchange  Zanmai  Labs  Pvt  Ltd,  known  as  WazirX,  and  its  Directors under FEMA for transactions involving crypto-currencies worth Rs. 2,790.74 crore has also been issued.

(d) RBI has been cautioning users, holders and traders of Virtual Currencies (VCs) vide public notices on 24 December, 2013, 01 February, 2017 and 05 December, 2017 that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks. RBI, vide its circular dated 31 May, 2021 has also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your  Customer  (KYC),  Anti-Money  Laundering  (AML),  Combating  of  Financing  of Terrorism (CFT), obligations under Prevention of Money Laundering Act (PMLA), 2002, etc.

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