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Virtual Digital Asset Reporting Entities to Meet PMLA, 2002 Due Diligence Norms
The Financial Intelligence Unit–India (FIU-IND) issues updated guidelines regulating service providers dealing in Virtual Digital Assets (VDAs). The guidelines bring VDA service providers within the AML/CFT/CPF framework and mandate compliance measures including a CERT-In empanelled cybersecurity audit certificate.
FIU-IND Guidelines for VDA Service Providers -
| Dimension | Key Details |
|---|---|
| Issuing authority | Financial Intelligence Unit–India (FIU-IND). |
| Coverage | Service providers dealing in Virtual Digital Assets (VDAs). |
| Regulatory framework applied | The anti-money laundering, Countering the Financing of Terrorism, Counter-Proliferation Financing (AML/CFT/CPF) framework. |
| Obligations mandated | Due diligence and reporting obligations similar to other reporting entities. |
| Legal ambit (year) | In 2023, VDA service providers are brought under the ambit of the Prevention of Money Laundering Act (PMLA), 2002. |
| Principal Officer requirement | Every VDA Reporting Entity provides for appointment of a Principal Officer (PO). |
| Cybersecurity audit certificate requirement | Issued by an auditor empanelled with the Indian Computer Emergency Response Team (CERT-In). |
| Unhosted wallet transactions | Reporting entities mandate collection of data on transfers involving unhosted (self-custody) wallets. |
| VDA definition | Any digitally generated information, code, number, or token (any currency) created using cryptographic or similar means that represents digital value and is electronically transferable, storable, or tradable. Under the Income-tax Act, 1961. |
| Includes | Non-Fungible Tokens (NFTs) or similar digital tokens. |
| NFT description | Unique token that can represent digital collectibles or real-world assets. |
| Tax on income from transfer of VDAs | Income from transfer of VDAs is taxable at the rate of 30% plus surcharge and cess. |