CHANDIGARH, Jan 11 – The Union Finance Ministry has significantly raised the bar for digital asset registrations, requiring cryptocurrency exchanges to record the precise latitude and longitude of every user starting a new account.
Operating under the Prevention of Money Laundering Act (PMLA), the Financial Intelligence Unit (FIU) has introduced these measures to eliminate anonymity in the digital asset market. Beyond location tracking, exchanges must now ensure that the person behind the screen is who they claim to be.
“The exchange shall also ensure that the client whose credentials are being furnished at the time of onboarding is the same individual who is actually accessing the application and personally initiating the account creation process,” the new protocol stipulates.
This verification is achieved through mandatory live selfies and software that detects physical movement, ensuring that static images or AI-generated deepfakes cannot be used to bypass security. To further solidify identity, the FIU requires OTP verification for both mobile numbers and email addresses, alongside a mandatory “penny-drop” bank verification.
The rules take a particularly firm stance on “high-risk” individuals, including Politically Exposed Persons (PEPs) and those with links to tax havens or jurisdictions on the FATF grey list. These users will face “enhanced client due diligence,” involving a deep dive into open-source data and independent databases.
The FIU’s new directive also targets the technical tools often used to hide crypto trails. It specifically discourages Initial Token Offerings (ITOs) and bans the facilitation of transactions involving “crypto tumblers” or “mixers,” which blend coins from different sources to make them untraceable.
Exchanges are now legally bound to preserve all client IDs, addresses, and transaction records for a minimum of five years. This data must be retained even longer if an active investigation is underway. By tightening these protocols, the FIU aims to bring the digital asset industry in line with traditional financial sectors, ensuring every transaction leaves a clear, verifiable footprint.
