Overview

• The Financial Intelligence Unit (FIU-IND) has issued formal warnings to cryptocurrency exchanges to prioritize monitoring transactions originating from Jammu & Kashmir and border areas due to concerns over terror financing and money laundering.
• Exchanges have been instructed to closely track and report transfers involving private wallets, which bypass Know Your Customer (KYC) regulations and increase anonymity.
• The advisory follows intelligence reports of suspicious crypto tokens, such as 'Pahalgam' and 'Operation Sindoor,' raising alarms about potential misuse for illegal activities.
• Over the past year, exchanges have tightened withdrawal rules, requiring detailed recipient information to curb misuse of cryptocurrencies for illicit purposes.
• SEBI has directed trustees of Alternative Investment Funds (AIFs) to evaluate risks related to money laundering and terror financing within their portfolios.