The Director, Financial Intelligence Unit-India (FIU-IND) issued non-compliance notices to 15 Virtual Digital Asset Service Providers on 9 September 2026, under Section 13 of the Prevention of Money Laundering Act, 2002. The platforms named include Weex, Blofin, Rezorex, Bitunix, DigiFinex, Toobit, XT.com, Latoken, WOO X, Pionex, ChangeNow, SimpleSwap, Fixedfloat, WhiteBIT and Guardarian.
The Director also issued takedown notices for their applications and URLs, acting as the nodal officer under Section 79(3)(b) of the Information Technology Act, 2000, read with rule 3(1)(d) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2025, on the ground that the entities were operating in India without complying with the PMLA.
The release ends with a warning worth quoting for what it reveals about India's position: crypto products and NFTs "are unregulated and can be highly risky", with "no regulatory recourse for any loss".
What FIU-IND is
FIU-IND was set up by an office memorandum of 18 November 2004, in the Department of Revenue of the Ministry of Finance, after the PMLA was enacted. It is the central national agency that receives, processes, analyses and disseminates information on suspect financial transactions, and it is India's member of the Egmont Group, the global network of financial intelligence units.
It does not investigate or prosecute. Banks, insurers, intermediaries and other reporting entities file prescribed reports with it — Suspicious Transaction Reports, Cash Transaction Reports above ₹10 lakh, cross-border wire transfer reports and others — and FIU-IND analyses them and passes intelligence to the Enforcement Directorate, the Income Tax Department, the CBI and the state police, who investigate. Under Section 13, the Director may call for records, order an audit, issue a warning, direct compliance, and impose a monetary penalty on a reporting entity, its designated director or an employee for each failure. The Director exercises the powers of a civil court under the Code of Civil Procedure for these enquiries. Past penalties under this section have run to several crore rupees, including against a payments bank and a foreign crypto exchange.
The parent law
The Prevention of Money Laundering Act, 2002 came into force on 1 July 2005. Money laundering, defined in Section 3, is the process of projecting the proceeds of a scheduled offence as untainted property; the punishment under Section 4 is rigorous imprisonment of three to seven years, extending to ten years for narcotics offences. The Act empowers the Enforcement Directorate to attach property provisionally, with confirmation by an Adjudicating Authority and appeal to the Appellate Tribunal; trials go to designated Special Courts. Chapter IV imposes the reporting, record-keeping and verification obligations, and Section 13 is the enforcement lever against a reporting entity that does not meet them. The Supreme Court upheld most of the Act's architecture in Vijay Madanlal Choudhary (2022). The banking sector page covers the financial system in which these entities operate.
How crypto came under the law
A notification of 7 March 2023 brought a defined set of virtual digital asset activities under the PMLA: exchange between virtual digital assets and fiat currency, exchange between different virtual digital assets, transfer of such assets, safekeeping or administration of them or of instruments giving control over them, and participation in and provision of financial services related to an issuer's offer and sale of a virtual digital asset.
Anyone carrying on those activities for another person in the course of business is a VDA Service Provider and must register with FIU-IND as a reporting entity. The crucial design feature — and the point of today's action — is that the obligation is activity-based, not presence-based: it applies to offshore platforms serving Indian users exactly as to Indian ones. That is why the 15 names are largely foreign entities, and why the remedy pairs a PMLA notice with an app takedown.
The tax treatment came a year earlier. The Finance Act, 2022 inserted Section 115BBH of the Income-tax Act, taxing income from the transfer of a virtual digital asset at a flat 30 per cent, with no deduction except cost of acquisition and no set-off of losses, and Section 194S, imposing 1 per cent TDS on payments for such transfers above the prescribed thresholds. Section 2(47A) supplies the definition of a virtual digital asset, which covers cryptocurrencies and non-fungible tokens.
Three positions therefore coexist, and the exam tests exactly this: crypto is not legal tender; it is not banned; it is taxed and regulated for money-laundering purposes. The Reserve Bank's circular of April 2018 telling banks not to deal with crypto businesses was set aside by the Supreme Court in Internet and Mobile Association of India v. RBI (2020) as disproportionate. India's own sovereign digital currency, the e-rupee or Central Bank Digital Currency, has been in pilot since 2022 and is a liability of the RBI — which is what makes it money and a private token not. The distinction between money and an asset is developed on the money supply page.
The international frame
The standard-setter here is the Financial Action Task Force (FATF), created in 1989 by the G7 and based in Paris, whose 40 Recommendations define the global anti-money-laundering and counter-terrorist-financing regime. Recommendation 15 extends it to virtual assets and virtual asset service providers, and requires the "travel rule" — originator and beneficiary information must travel with a transfer. FATF's grey list ("jurisdictions under increased monitoring") and black list ("high-risk jurisdictions subject to a call for action") are its enforcement teeth.
India was assessed in the Mutual Evaluation Report published on 19 September 2024, which placed India in regular follow-up — the best of FATF's categories — and noted that virtual asset service providers had been added to the supervisory plan and that enforcement action had been taken against them. Notices of the kind issued on 9 September are precisely that enforcement record.
🔑 Revision block
The action. FIU-IND notices to 15 VDA service providers, 9 September 2026, under Section 13 of the PMLA; app and URL takedown sought under Section 79(3)(b) of the IT Act, 2000 with rule 3(1)(d) of the 2025 Intermediary Guidelines amendment. FIU-IND. Set up 18 November 2004; Department of Revenue, Ministry of Finance; central agency for suspect-transaction intelligence; member of the Egmont Group; analyses, does not investigate; Section 13 gives it warning, audit, compliance-direction and penalty powers with civil-court powers of enquiry. PMLA 2002. In force 1 July 2005; Section 3 defines money laundering; Section 4 punishes with 3–7 years (up to 10 for narcotics); ED attaches, Adjudicating Authority confirms, Appellate Tribunal hears appeals, Special Courts try; upheld in Vijay Madanlal Choudhary (2022). Crypto under PMLA. Notification of 7 March 2023; five listed activities; obligation is activity-based, so offshore platforms serving Indians are covered. Tax. Section 115BBH — 30% flat, only cost of acquisition deductible, no loss set-off; Section 194S — 1% TDS; Section 2(47A) defines a VDA, including NFTs. Status. Not legal tender, not banned, taxed and AML-regulated; RBI's 2018 circular set aside in IAMAI v. RBI (2020); e-rupee CBDC in pilot since 2022. FATF. 1989, Paris, 40 Recommendations; Recommendation 15 covers virtual assets; travel rule; grey and black lists; India's Mutual Evaluation Report, 19 September 2024 — regular follow-up.
🎯 Practice MCQs
Q1. FIU-IND functions under the: (a) Reserve Bank of India (b) Department of Revenue, Ministry of Finance (c) Ministry of Home Affairs (d) SEBI → (b).
Q2. Notices to non-compliant reporting entities were issued under which section of the PMLA? (a) Section 3 (b) Section 5 (c) Section 13 (d) Section 45 → (c).
Q3. Virtual digital asset service providers were brought under the PMLA in: (a) 2020 (b) 2022 (c) 2023 (d) 2025 → (c) — March 2023.
Q4. Income from the transfer of virtual digital assets is taxed at: (a) 10% (b) 20% (c) 30% (d) at slab rates → (c) — Section 115BBH.
Q5. The rate of TDS on payments for transfer of a virtual digital asset is: (a) 0.1% (b) 1% (c) 2% (d) 5% → (b) — Section 194S.
Q6. The Prevention of Money Laundering Act came into force in: (a) 2002 (b) 2003 (c) 2005 (d) 2009 → (c) — enacted 2002, in force 1 July 2005.
Q7. Which agency investigates offences under the PMLA? (a) FIU-IND (b) Enforcement Directorate (c) CBIC (d) NIA → (b) — FIU-IND analyses and disseminates.
Q8. The FATF is headquartered in: (a) Basel (b) Paris (c) Vienna (d) Washington DC → (b) — established 1989.
Q9. FATF's Recommendation 15 deals with: (a) beneficial ownership (b) cash couriers (c) new technologies, including virtual assets (d) wire transfers → (c).
Q10. In its 2024 Mutual Evaluation Report, FATF placed India in: (a) the grey list (b) the black list (c) regular follow-up (d) enhanced follow-up → (c) — the best category.
Q11. The RBI circular restricting banks from dealing with crypto businesses was set aside by the Supreme Court in: (a) 2018 (b) 2020 (c) 2022 (d) 2024 → (b) — Internet and Mobile Association of India v. RBI.
Q12. Consider the following: 1. A cash transaction report must be filed for transactions above ₹10 lakh. 2. Non-fungible tokens fall within the definition of a virtual digital asset. (a) 1 only (b) 2 only (c) Both (d) Neither → (c).
📋 How this gets asked (PYQ pattern)
Financial-regulation questions come in four shapes. The agency item — FIU-IND versus the Enforcement Directorate versus the RBI, with functions crossed. The status item — is crypto legal tender, banned, taxed, or regulated, usually as a statement pair. The number item — 30 per cent, 1 per cent TDS, ₹10 lakh, or the year a law came into force. The FATF item — founding year, headquarters, the grey list, and which recommendation covers virtual assets.
The fresh 2026 hook is the 15 platforms and the pairing of a PMLA notice with an IT Act takedown, likeliest as a statement pair on which ministry FIU-IND belongs to and whether crypto is legal tender. We describe the recurring pattern, not any exact past question.
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✍️ Written by Aditya Tiwari — Polity, environment & governance faculty at The Cavalier. Reviewed by the Cavalier Faculty Desk. The Cavalier, founded by ex-Army officers, has trained NDA/CDS/SSB aspirants since 2001 (Facebook · YouTube).
Source: PIB / Ministry of Finance, 9 September 2026. Statutory provisions, tax sections and FATF findings cross-verified with FIU-IND, the Income-tax Act and independent sources.