Terror Funding 2.0: ‘Crypto Hawala’ May Be Used To Revive Separatist...

Key Highlights

• While India requires all Virtual Digital Asset Service Providers (VDA SPs) to register with the Financial Intelligence Unit (FIU), this shadow network operates entirely off the grid.
• For the 2024-25 fiscal year, only 49 exchanges have registered as legal reporting entities, prompting the government to come out with fresh guidelines that include a mandatory liveness detection and geographical tracking, besides asking users to take a “live selfie” using software that verifies their presence, typically through eye-blinking or head movement.
• The “penny-drop” method, which involves processing a nominal Re 1 transaction to confirm that the bank account is active and belongs to the registrant, is required.
• In addition to a Permanent Account Number (PAN), users must provide a secondary ID, such as a Passport, Aadhaar or Voter ID, verified via OTP.
• A detailed study done by the Jammu and Kashmir Police, along with central security agencies, identified people in countries like China, Malaysia, Myanmar and Cambodia directing people in the union territory to create private crypto wallets, which are often set up using a Virtual Private Network (VPN) to avoid detection and require no Know Your Customer (KYC) or identity verification.