Catenaa, Monday, January 19, 2026- India’s Financial Intelligence Unit has introduced stricter Know Your Customer rules for cryptocurrency platforms, requiring live identity verification, geolocation tracking, and verified bank account details to curb illicit activity.
The updated framework classifies crypto exchanges as Virtual Digital Asset service providers, mandating enhanced anti-money laundering procedures and broader client due diligence.
Under the new rules, exchanges must verify users through live ID checks and collect technical identifiers including IP addresses with timestamps, device IDs, wallet addresses, and transaction hashes.
Customers must submit a Permanent Account Number and a secondary government ID such as a passport, Aadhaar card, or voter ID, alongside one-time password verification for email and phone numbers.
Bank accounts must be confirmed using a penny-drop method to ensure ownership and operational status.
The framework also aims to discourage fundraising through Initial Coin Offerings and Initial Token Offerings. Exchanges must implement heightened scrutiny for high-risk transactions, politically exposed persons, non-profit entities, and clients in jurisdictions flagged by the Financial Action Task Force. Anonymity-enhancing tools such as mixers and tumblers must be detected and blocked.
Customer records and transaction data must be retained for at least five years or until investigations are complete.
Industry participants welcomed the measures, noting that they clarify compliance expectations and reduce enforcement uncertainty. Officials cited risks of money laundering, terror financing, and tax evasion as motivating the tighter KYC and monitoring requirements.
