Selfie, ‘penny-drop’ mandated as KYC for crypto customers in India, Pg10

Key Highlights:

• FIU mandates new KYC measures for cryptocurrency exchanges in India, effective January 8.
• Measures include selfie with liveness detection, geo-coordinate recording, and 'penny-drop' bank verification.
• Initial Coin Offerings (ICOs) and transactions involving tumblers, mixers, and anonymity-enhancing tokens are discouraged.
• Crypto exchanges must register with FIU and report suspicious transactions under PMLA.

Detailed Insights:

• The updated guidelines aim to combat money laundering, terrorist financing, and proliferation financing risks associated with crypto assets.
• Client due diligence requires exchanges to obtain PAN, selfie with liveness detection, geo-coordinates, date, timestamp, and IP address.
• These guidelines were updated three years after the initial publication in March 2023.
• FIU functions under the Union Finance Ministry and acts as the single-point regulator for cryptocurrency exchanges in India.

Key Concepts Involved:

• KYC (Know Your Customer): Process of verifying a customer's identity and assessing potential risks.
• PMLA (Prevention of Money Laundering Act): Indian law to combat money laundering.
• FIU (Financial Intelligence Unit): Agency responsible for receiving, processing, analyzing, and disseminating information related to financial transactions.