Indian Agency Raids Crypto Exchange CoinSwitch Kuber for FX Law Violations

Indian anti-money laundering agency, Enforcement Directorate (ED), raided the premises of CoinSwitch Kuber, one of the largest local cryptocurrency exchanges, under the suspension of forex law violations.

The agency searched five premises linked to the crypto exchange, including office facilities and residences of directors and the CEO. CoinSwitch allegedly violated the Foreign Exchange Management Act (FEMA) with the acquisition of shares of over 20 billion rupees ($250 million).

According to Bloomberg, the exchange was also found to be violating certain know-your-customer (KYC
Know Your Customer (KYC)

Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC…