Overview
- Security and intelligence officials report a digital hawala system moving untraceable foreign funds into Jammu and Kashmir, with concerns the flows may support terror activity and revive separatist elements.
- Handlers based in China, Malaysia, Myanmar and Cambodia allegedly direct locals to open private crypto wallets that require no KYC, often created using VPNs to evade detection.
- Jammu and Kashmir Police have suspended VPN services in the Valley after finding links between VPN use and crypto wallet registrations.
- Wallet holders reportedly travel to cities such as Delhi and Mumbai to sell cryptocurrency for cash through unregulated P2P traders, breaking the financial trail before money re-enters the local economy.
- Officials highlight enforcement gaps as only 49 exchanges are registered with the FIU for 2024–25 despite stricter onboarding checks like liveness detection, geo-tracking, live selfies, PAN with secondary ID, OTP verification and penny-drop validation, while off-exchange P2P activity remains outside AML oversight.