Crypto exchanges accused of laundering Rs 1,000 crore

economictimes.indiatimes.com:

Enforcement Directorate (ED) is probing at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime of the accused firms under investigation in the instant loan app case most of them having a China link, said people aware of the matter. The probe has unearthed instances of the accused firms approaching the exchanges to buy crypto coins for more than Rs 100 crore and crypto coins being sent to international wallets, the people told ET on condition of anonymity.

The exchanges did not conduct any enhanced due diligence and even failed to raise suspicious transaction reports (STRs), they said. The ED is expected to question officials of the crypto exchanges under investigation again next week, said an industry executive.

“While so far the agency has frozen the accounts of WazirX, similar transactions have taken place on the other exchanges and they have been asked to join the probe,” said an official familiar with the development. In many cases, the KYC details (know your customer) collected by the exchanges were found to be dubious, according to a person privy to the information.

“They were traced to some persons living in remote areas or a tier-2 or tier-3 town, having no connection with the transactions,” said the person. While the exchanges claim that they were meeting the required compliance requirements by maintaining the KYC details, they failed to raise STRs, according to the person.

“Once these firms learned that they were under the scanner, they shut shop and used the crypto route to siphon the funds abroad. The opaque nature of the crypto ecosystem and the industry not being regulated provided the requisite cover for these firms to park their assets