Virtual Digital Asset Service Providers (VDA SPs) have been notified as “reporting entities” under PMLA since March 2023, covering activities like exchange, transfer, safekeeping, and related financial services in VDAs. Such entities are required to register with FIU-IND and comply with obligations including customer due diligence, record keeping, training, and suspicious transaction reporting. Earlier circulars provided initial directions for registration. This 3rd revision standardises and strengthens the registration process, adding new documentation and compliance requirements.

The circular prescribes a revised process for VDA SP registration with FIU-IND:

• Mandatory In-person Meeting: Designated Director and Principal Officer must attend at FIU-IND office. Meeting will be scheduled only after complete information is furnished.
• Documents Required: Detailed submissions include:
  • Note on nature of services and applicability under PMLA notification (March 07, 2023).
  • Corporate structure with organogram and details of significant beneficial ownership.
  • Incorporation documents, annual returns, audited financials, GST returns (3 years), IT returns, and TDS forms (26Q, 26QF, 26QE).
  • Copies of contracts/arrangements with domestic or international entities (exchanges, brokers, custodians, etc.).
  • PACT (Partner Accreditation for Compliance and Trust) certificate from FIU-registered VDA SPs where applicable.
  • Self-declaration of no ongoing proceedings with ED or other enforcement agencies.
  • Completed AML/CFT compliance questionnaire.
  • Cyber security audit certificate from CERT-In empanelled auditors confirming compliance with IT Act requirements.
• System Demonstration: At in-person meeting, live demo of AML/CFT tools and systems (KYC, transaction monitoring, blockchain analysis, sanctions screening, Travel Rule compliance) is required.
• Processing: Applications must be made through FINNet 2.0 portal. System-generated FIUREID is reference only—final registration is granted only after completion of online registration and approval by FIU-IND Director.
• Consequences of Non-Compliance:
  • Failure to register itself is a violation of PMLA, attracting action under Section 13(2).
  • Director, FIU-IND may deny or cancel registration if obligations are not fulfilled.

The circular requires immediate compliance by all Designated Directors, Principal Officers, and Chief Compliance Officers of VDA SPs.