India Tightens AML Scrutiny on Crypto Transactions Above $10,000

TLDR

• India orders reporting of crypto OTC trades exceeding $10,000 thresholds

• FIU expands AML oversight to private crypto transactions and entities

  

• Exchanges must preserve OTC transaction records from January 2026

• Beneficial ownership checks become central for large crypto deals

• New rules increase scrutiny on wallets, funds, and transaction trails

India has directed major crypto exchanges to report over-the-counter transactions above $10,000, according to The Economic Times. The Financial Intelligence Unit issued the request after a late-May meeting with at least three large platforms. India also ordered exchanges to trace and preserve covered records from January 2026 onward.

FIU Targets Private High-Value Trades

The directive covers negotiated crypto deals that take place outside public exchange order books. Such trades help large clients reduce price disruption while moving substantial amounts through private channels. However, private structures can make identity checks harder and weaken visibility into the true funding source.

The FIU wants exchanges to identify directors, controllers, and ultimate beneficial owners behind qualifying transactions. Platforms must review corporate records, ownership chains, transaction purposes, and the source of funds. India expects stronger checks to expose false documents, mule accounts, and hidden control arrangements.

OTC clients often request quick withdrawals to private wallets after completing a trade. Once funds leave an exchange, the platform has less control over their later movement. Therefore, exchanges must examine destination wallets, ownership evidence, and post-trade transfers before releasing assets.

India Extends Existing AML Controls

India already places virtual digital asset service providers under its Prevention of Money Laundering framework. The framework requires registered platforms to retain records, report suspicious activity, and meet FIU-IND obligations. The latest action extends these duties to large private trades and complex corporate ownership structures.

In January, India introduced stronger know-your-customer checks for users on registered crypto platforms. The measures included live selfies, geolocation checks, and internet protocol tracking during onboarding. Exchanges must also refresh customer records every six or twelve months based on account risk.

Authorities have also used penalties and registration notices to enforce compliance across the sector. Binance previously paid a $2.25 million penalty for anti-money laundering failures linked to its Indian operations. India has also warned offshore platforms serving local users without completing required FIU registration.

OTC Desks Face Broader Record Duties

The directive requires OTC desks to strengthen checks before and after transaction settlement. Exchanges must collect ownership records, funding evidence, transaction reasons, and destination wallet details. They can delay trades when customers provide incomplete documents or unclear ownership information.

Private companies, trusts, and intermediaries often use several legal layers within one transaction. Consequently, platforms can request incorporation papers, shareholder records, board details, tax documents, and supporting contracts. India aims to bring these private crypto trades closer to established financial reporting standards.

The measure does not ban cryptocurrency ownership, trading, or legal OTC activity. Instead, it expands reporting duties and reduces anonymity around high-value transactions handled by regulated platforms. India now places greater scrutiny on private crypto channels operating beyond visible exchange order books.

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