/ Cryptocurrency

Financial Intelligence Network 2.0: FIU-IND Reporting

Financial Intelligence Unit - India (FIU-IND)

FIU – IND Reporting Guide for Entities on Financial Intelligence Network 2.0 Portal

  • FIU-IND stands for the Financial Intelligence Unit of India, the central national agency responsible for collecting intelligence related to financial transactions in India. Its primary function is to safeguard India’s financial system from the adverse impacts of money laundering, terrorist financing, and other economic crimes. Financial Intelligence Unit – India reports to the Economic Intelligence Council (EIC), which is headed by the Finance Minister of India.
  • Rationale for Upgrade: The rapid increase in data volume from suspicious transaction reports required a technological upgrade to maintain efficient and effective financial crime monitoring.
  • Technological Integration: Financial Intelligence Network 2.0 integrates artificial intelligence (AI) and machine learning tools to enhance the analytical capabilities of Financial Intelligence Unit – India.
  • India’s Financial Intelligence Unit Unveils Advanced Technology System to Combat Financial Crimes. Indian Govt Launch of Financial Intelligence Network 2.0 (FINNet 2.0) by India’s Financial Intelligence Unit
  • Rising Data Volume Demands Technological Upgrade: The significant increase in suspicious transaction reports necessitated the upgrade to enhanced analytical capabilities.
  • Established to Fight Money Laundering and Terror Financing: Financial Intelligence Unit was founded in 2004 under the Prevention of Money Laundering Act with the primary objective of combating financial crimes such as money laundering and terror financing.
  • Financial Intelligence Network 2.0 Enhances Analytical Competencies: The new system leverages emerging technologies like AI and machine learning to provide better analytical capabilities and improve compliance monitoring.
  • Focus on Data Security and Confidentiality: Strong encryption and access controls are implemented to ensure the confidentiality and security of sensitive financial information.
  • Key Features Include Risk Analytics and AI Integration: Financial Intelligence Network 2.0 prioritizes cases using risk analytics and employs AI for advanced data analytics.
  • Security Measures: Financial Intelligence Network 2.0 Emphasis on robust data security protocols, including strong encryption and access controls, to safeguard sensitive financial information and ensure confidentiality.

Components of Financial Intelligence Network 2.0: Sub-Systems for Information Collection & Dissemination

    • FINGate: Data collection platform. Responsible for collecting data from various reporting entities.
    • FINCore: Analytics engine. Serves as the analytics hub, utilizing AI and risk analytics to process and analyze data.
    • FINex: Platform for intelligence dissemination. Facilitates the dissemination of intelligence to relevant enforcement agencies and international partners.

Financial Intelligence Unit – India  Reporting 

  • Financial Intelligence Network 2.0 represents a significant step forward in Financial Intelligence Unit – India efforts to combat financial crimes, leveraging cutting-edge technology to enhance its analytical and compliance monitoring capabilities.
    • The indicative list of reports to be submitted to Financial Intelligence Unit – India  includes:
      • PTR (Property Transaction Report)
      • NTR (Non-Profit Organization Transaction Report)
      • CCR (Counterfeit Currency Transaction Report)
      • STR (Suspicious Transaction Report)
      • CBWTR (Cross Border Wire Transfer Report)
      • CTR (Cash Transaction Report)
  • Financial Intelligence Unit of India has Primary Function to Safeguard India’s financial system from the adverse impacts of money laundering, terrorist financing, and other economic crimes. & Reporting Body of FIU-IND reports to the Economic Intelligence Council (EIC), headed by the Finance Minister of India.
  • Financial Intelligence Network 2.0 Portal (FINNet 2.0) represents a significant step forward in FIU-IND’s efforts to combat financial crimes, leveraging cutting-edge technology to enhance its analytical and compliance monitoring capabilities. The system’s advanced features and robust security measures ensure the effective safeguarding of India’s financial system.

Plea 7 Offshore Crypto Exchanges to Restart India Ops to be Heard this Week

The Financial Intelligence Unit (FIU) of India is set to hear petitions from seven offshore crypto exchanges—Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp—this week regarding their request to restart operations in India. These exchanges were previously banned for failing to comply with India’s Prevention of Money Laundering Act (PMLA).

A senior official stated that the exchanges will be permitted to operate again only if they comply with PMLA regulations, which include registering in India, adhering to KYC (Know Your Customer) norms, and reporting suspicious transactions. Additionally, they must pay penalties and clear their pending Goods and Services Tax (GST) liabilities.

The amount of the penalty will be determined after the exchanges present their case. Even if they agree to comply, it could take time for their operations to resume. Furthermore, the Ministry of Electronics and Information Technology (MeitY) may require them to shift their servers to India.

This comes after virtual digital assets service providers were brought under the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) framework in March 2023. Currently, 38 crypto entities are registered in India, and recent enforcement actions include penalties imposed on Binance and Kucoin for non-compliance with the PMLA.

FIU previously lifted Kucoin’s ban in March 2024 and allowed Binance to resume operations after fines were paid and compliance was ensured. The hearing of these petitions is crucial for the future of foreign crypto exchanges in India’s regulated crypto market.

Customer Identification and Verification: A Pillar of Customer Due Diligence : 

  • Customer Identification and Verification form the foundation of the Customer Due Diligence process. Under the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, regulated entities are required to conduct Customer Identification and Verification  when establishing a business relationship with a client.
  • An AML Business Risk Assessment evaluates a business’s exposure to Money Laundering and Financing of Terrorism  Risks. This essential process enables organizations to adopt a risk-based approach to mitigate Money Laundering and Financing of Terrorism  Risks effectively. By leveraging these assessments, businesses can implement proportionate risk mitigation strategies, ensuring optimal resource allocation and compliance efficiency.

Exceptions to Verification Timing

  • The Guidelines allow certain exceptions, enabling regulated entities to establish business relationships even before completing customer verification under specific circumstances. However, these exceptions are time-bound, requiring verification to be completed within 30 days of initiating the business relationship.

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