India PMLA VDA Service Provider AML/CFT Regime

The Mar. 7, 2023 Gazette notification applies when specified activities are carried out for or on behalf of another natural or legal person in the course of business. The covered activities are exchange between VDAs and fiat currencies; exchange between one or more forms of VDAs; transfer of VDAs; safekeeping or administration of VDAs or instruments enabling control over VDAs; and participation in, or provision of financial services related to, an issuer’s offer and sale of a VDA. The notification uses the Income-tax Act definition of “virtual digital asset.”

Once a VDA service provider falls within the notified activities, it is treated as a reporting entity for PMLA purposes. PMLA section 12 requires reporting entities to maintain records that enable reconstruction of individual transactions, furnish prescribed transaction information to the Director, and maintain client and beneficial-owner identity records. The statute also sets five-year retention periods for transaction and client-identity records.

The PML Rules add operational detail. They require records for suspicious transactions, cash thresholds, nonprofit receipts, cross-border wire transfers, and other prescribed transaction categories. They also require principal officers to furnish monthly transaction information and promptly report suspicious transactions, while maintaining confidentiality around reporting.

FIU-IND’s original VDA AML/CFT guidelines took effect on Mar. 10, 2023. They require service providers to register as reporting entities with FIU-IND, disclose relevant bank and financial-institution account details, maintain AML/CFT/CPF programs, appoint a designated director and principal officer, implement KYC, CDD and EDD controls, train staff, and maintain internal audit and control processes. FIU’s downloads page lists an updated VDA AML/CFT guideline dated Jan. 8, 2026 and a third revised registration circular dated Sept. 15, 2025.

The VDA guidance also treats VDA transfers as analogous to wire transfers for AML purposes. It addresses intermediary service providers, record retention where technical limitations prevent information from travelling with a transfer, high-risk transfers to or from unhosted wallets, and Travel Rule information such as originator and beneficiary names, PAN or national identity number, wallet addresses, and geographic address or birth details.

The regime is activity-based. PIB’s Dec. 28, 2023 release stated that onshore and offshore VDA service providers operating in India and engaged in covered activities must register with FIU-IND as reporting entities, and that obligations are not contingent on physical presence in India. FIU-IND issued show-cause notices to nine offshore VDA service providers in December 2023, then issued notices to 25 more offshore VDA service providers in October 2025. PIB’s October 2025 release said 50 VDA SPs had registered with FIU-IND by that date.

The Ministry of Finance later told the Lok Sabha that, as of Mar. 9, 2026, 54 VDA SPs had registered with FIU-IND as reporting entities and that FIU-IND had directed takedown of applications and URLs of 53 VDA SPs found to be operating without complying with PMLA. The same answer said FIU-IND does not publish the registered VDA SP list, partly to avoid creating an impression that registration is a licence, approval, or user-protection guarantee.

This is an India national AML/CFT regime profile. It is not a full crypto licensing statute, securities classification regime, payments law, or tax profile. Its main relevance is to exchanges, custodians, transfer services, issuer-related VDA service providers, offshore platforms serving Indian users, and compliance teams tracking FIU-IND reporting-entity obligations under PMLA.