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Crypto Platforms Linked to Hawala, CSAM and Terror Funding: FIU Report
FIU Report: In the financial year 2024-25, the FIU registered 49 crypto exchanges and imposed a fine of ₹28 crore for violations. The official report reveals a significant misuse of crypto funds for serious crimes such as money laundering, terror funding, and fraud.
As the crypto market in the country is growing at a pace, the regulatory environment is becoming increasingly stringent. The number of crypto exchanges registered in the financial year 2024-25 with the Financial Intelligence Unit is 49; however, the probes for irregular transactions carried out in the crypto exchanges have revealed ‘serious’ offenses such as hawala transactions, gambling, and even terrorist financing.
According to an official report, a total of 49 Virtual Digital Asset Service Providers (VDA SPs) registered with the FIU as reporting entities by March 2025. Of these, 45 exchanges are based in India, while four are overseas. Unlike other countries, India has designated the FIU under the Ministry of Finance as a single-point authority to address the risks of money laundering and terror financing.
A "strategic analysis" of Suspicious Transaction Reports (STRs) submitted by exchanges revealed alarming facts. The report found that crypto funds are being "misused" for activities such as hawala transactions, online gambling, scams, and fraud.
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The agency has also pointed out a number of “red flag” issues that are even more sensitive. These issues include those associated with child sex abuse images, dark net services, and financing of terrorist activities, which suggest growing use of crypto assets for seriously nefarious ends.
The government has made significant efforts against those who break the rules. According to the report, the agency has imposed a total fine of ₹28 crore on some non-compliant crypto exchanges during the 2024-25 fiscal year. It's worth noting that cryptocurrencies are legally referred to as "virtual digital assets" (VDA). In 2023, these exchanges were brought under the ambit of the Prevention of Money Laundering Act (PMLA). Under this, they are required not only to report suspicious transactions but also to disclose their bank accounts, implement internal audits, and strictly adhere to KYC regulations.
The report acknowledges that the crypto landscape in India is rapidly evolving and has the potential to transform the financial sector. However, its global reach, peer-to-peer transaction capabilities, and privacy pose a high risk of money laundering. Analysis of suspicious activity also revealed a specific regional concentration, which is a concern for investigative agencies.
