India’s FIU Targets Large OTC Crypto Trades for AML Oversight

The directive targets private deals that bypass public order books, a common practice for large buyers aiming to avoid price slippage. While these transactions facilitate institutional activity, regulators worry they obscure the true source of funds. By requiring exchanges to trace and preserve records for these deals, the FIU aims to combat the use of shell companies and mule accounts that complicate standard identity verification.

This move reinforces India’s broader strategy to integrate virtual digital asset providers into its Prevention of Money Laundering framework. Recent enforcement actions, including a $2.25 million penalty against Binance, have set a precedent for strict compliance. Exchanges must now prepare for more rigorous documentation requirements, including mandatory checks on transaction purposes and the destination of assets once they exit exchange-controlled wallets.