Financial Intelligence Unit India

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Recently, as part of compliance action against the offshore entities, Financial Intelligence Unit India (FIU IND) has issued compliance Show Cause Notices to nine offshore Virtual Digital Assets Service Providers (VDA SPs) under the Prevention of Money Laundering Act, 2002 (PMLA).

About Financial Intelligence Unit India:

  • It was set up by the Government of India in 2004.
  • It is the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions.
  • It is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
  • Functions of FIU-IND

o Collection of Information: Act as the central reception point for receiving Cash Transaction reports (CTRs), Non-Profit Organisation Transaction Report(NTRs), Cross Border Wire Transfer Reports (CBWTRs), Reports on Purchase or Sale of Immovable Property (IPRs) and Suspicious Transaction Reports (STRs) from various reporting entities.

o Analysis of Information: Analyze received information in order to uncover patterns of transactions suggesting suspicion of money laundering and related crimes.

o Sharing of Information: Share information with national intelligence/law enforcement agencies, national regulatory authorities and foreign Financial Intelligence Units.

o Act as Central Repository: Establish and maintain national data base on the basis of reports received from reporting entities.

o Coordination: Coordinate and strengthen collection and sharing of financial intelligence through an effective national, regional and global network to combat money laundering and related crimes.

o Research and Analysis: Monitor and identify strategic key areas on money laundering trends, typologies and developments.

What are Virtual Digital Assets?

  • According to the Income Tax Act, 'virtual digital asset' refers to any information, code, number, or token (not being Indian currency or foreign currency) generated through cryptographic means and blockchain technologies.
  • It can be transferred, stored, or traded electronically and its definition specifically includes a non-fungible token (NFT) or any other token of similar nature, by whatever name is called. 

Q1) What is Non-fungible token?

These are blockchain-based tokens that each represent a unique asset like a piece of art, digital content, or media. An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical.

Source:Financial Intelligence Unit India (FIU IND) issues compliance Show Cause Notices to nine offshore Virtual Digital Assets Service Providers (VDA SPs)