RBI - Customer Due Diligence for transactions in Virtual Currencies (VC)

Last updated: 02 June 2021

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The Reserve Bank of India (RBI) has issued a notification clarifying that previous circulars cautioning against virtual currency transactions are no longer valid. This is due to a Supreme Court ruling in March 2020 that set aside the RBI's 2018 circular. Banks and other regulated entities must now conduct customer due diligence for virtual currency transactions in line with existing Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating Financing of Terrorism (CFT) regulations.

Reserve Bank of India RBI/2021-22/45 DOR. AML.REC 18 /14.01.001/2021-22 May 31, 2021 All Commercial and Co-operative Banks / Payments Banks/ Small Finance Banks / NBFCs / Payment System Providers Madam / Dear Sir, Customer Due Diligence for transactions in Virtual Currencies (VC)

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FAQ :

No, the RBI's circular dated April 6, 2018, which cautioned against dealing in virtual currencies, was set aside by the Supreme Court on March 4, 2020, and is therefore no longer valid.

Banks and regulated entities must continue to perform customer due diligence processes for virtual currency transactions, adhering to regulations for Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating Financing of Terrorism (CFT).

Yes, in addition to KYC, AML, and CFT, entities must ensure compliance with relevant provisions under the Foreign Exchange Management Act (FEMA) for overseas remittances.

The clarification is based on the order of the Hon'ble Supreme Court in the matter of Writ Petition (Civil) No. 528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India).

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Notification No : RBI/2021-22/45 DOR. AML.REC 18 /14.01.001/2021-22
Published in Community & General
Source : https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12103&Mode=0

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