Intel Agency suspects Crypto is being used for Indian terrorist financing and drugs

Findings from the Indian Financial Information Unit (FIU) show suspicions that cryptocurrencies are being used for illegal activities such as terrorist financing, cybercrime, drug trafficking and illegal betting.

FIU’s Virtual Digital Assets (VDAs) and its service providers (such as crypto exchanges) prepared for the 2023-2024 fiscal year have analyzed numerous suspicious transaction reports (STRs) from this sector.

These findings are shared with agencies such as the Enforcement Bureau (ED), the Central Bureau of Investigation (CBI), and the Department of Income Tax, which ultimately lead to enforcement action in certain cases.

The report also mentions fake coins, massive crypto trading on illegal forex apps, and shady pumps and dump schemes that attempt to engage individuals suspected of illegal activity.

India’s Crypto Regulations in Spotlight

The news breaks at a time when India is creating a framework for regulatory cryptocurrency. Although not illegal, revenue from cryptocurrency transactions has been taxed at a fixed 30% rate since 2022.

Therefore, the findings may affect FIU reporting regulations. Not to mention doubts can affect cryptocurrency recognition and adoption.

The RBI (Reserve Bank of India) has also expressed doubts about private cryptocurrencies and viewed it as a major risk to India’s economic and financial stability.

The Continuous Battle against India’s Financial Crime

India has historically struggled with challenges related to money laundering and terrorist financing. Last year, the international money laundering watchdog, Financial Action Task Force (FATF), urged the country to speed up prosecutors in financial fraud cases.

Despite complying with most parameters, India has been rated as moderately effective in investigating and prosecuting money laundering, with issues such as court backlogs slowing convictions.

Adding cryptocurrency to the mix brings the challenge of making criminal activity even worse, as it all becomes very complicated and the pseudonymous nature of digital currency can potentially hinder authorities when trying to track criminal transactions.

It is not clear how India will respond to the findings of the FIU report, but all of this underscores the need for a robust regulatory framework that balances innovation and prevention of illegal activities in the crypto industry.