India’s Financial Intelligence Unit (FIU-IND) has directed at least three major cryptocurrency exchanges to submit detailed records of over-the-counter (OTC) crypto transactions exceeding $10,000, according to a report by The Economic Times. The directive, which mandates preservation of data from January 2026 onward, marks a significant escalation in the country’s anti-money laundering (AML) efforts targeting the crypto sector.
The request emerged from a meeting in late May and focuses on large private trades that do not pass through public exchange order books. Such OTC deals, often used by high-net-worth individuals, institutions, and corporate entities to move large sums without triggering market volatility, have historically posed challenges for ownership verification. Regulators are now demanding that exchanges identify the ultimate beneficial owners behind these transactions—including directors, controllers, and intermediaries of private companies, trusts, or closely held entities.
“OTC players are primarily private companies where the KYC procedure can be a greater challenge compared to retail investors,” an official at a crypto intermediary told The Economic Times. This complexity arises because verifying corporate structures, ultimate beneficial owners, and source of funds requires more documentation than checking an individual’s identity. Additional concerns involve rapid withdrawals to private wallets after settlement, which reduce an exchange’s ability to track subsequent fund movements.
The move builds on India’s broader integration of crypto platforms into its Prevention of Money Laundering framework. In January, the FIU had already issued guidelines requiring tougher KYC checks—including live selfie verification, geolocation, and IP tracking during onboarding—and mandated periodic updates of customer records. The new OTC directive shifts attention from visible exchange trading to off-book channels that may still touch regulated platforms.
India’s Finance Ministry classifies virtual digital asset service providers as reporting entities under the PMLA, obligating them to maintain records, file suspicious transaction reports, and comply with FIU-IND requirements. The latest directive means OTC desks will likely need stronger pre- and post-settlement checks, collecting more documents on beneficial ownership, transaction purpose, and destination wallets. This could slow down large crypto purchases and add bureaucratic layers for corporate clients.
Industry observers note that the requirement does not ban crypto trading or impose new restrictions on ownership; it expands reporting obligations within the existing legal framework, which already includes a 30% tax on gains and a 1% TDS on transfers. The development aligns with a global trend—from the U.S. to Singapore—toward greater scrutiny of beneficial ownership and large transfers. India’s latest step signals that anonymity in high-value crypto transactions is rapidly shrinking, bringing the sector closer to traditional financial transparency norms.
