India tightens crypto rules with stricter KYC and live identity checks
India’s Financial Intelligence Unit (FIU) has introduced stricter rules for cryptocurrency exchanges to combat money laundering. The updated guidelines demand tougher identity checks, live verification, and ongoing monitoring of users. Exchanges will now face higher costs and more complex compliance procedures.
Under the new protocols, exchanges must verify bank accounts using the 'penny-drop' method. They will also collect detailed geo-tagging data—including latitude, longitude, date, timestamp, and IP address—when users sign up. Live detection through selfies, with checks for eye or head movement, is now mandatory to confirm a customer’s presence during onboarding.
Exchanges must store user details such as names, addresses, and transaction records for at least five years. High-risk clients—those linked to tax havens, politically exposed individuals, or non-profits—will require KYC updates every six months. All other users must refresh their verification annually. The stricter measures will increase operational and compliance costs for exchanges. Enhanced monitoring systems and reporting requirements add further financial pressure.
The tighter regulations aim to strengthen India’s anti-money laundering defences in the crypto sector. However, the added burdens could push startups toward more lenient jurisdictions, reducing innovation and fundraising opportunities within the country.
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