Examine the role of the Financial Intelligence Unit-India in India's AML/CFT architecture. Assess the adequacy of existing statutory powers to enforce compliance on non-resident service providers.

Established under the Prevention of Money Laundering Act (PMLA), 2002 and functioning under the Department of Revenue, Ministry of Finance, FIU-IND is India's central agency for receiving, analysing and disseminating information on suspicious financial transactions. Its recent action against 15 Virtual Digital Asset Service Providers (VDA SPs) [1] shows both the reach and the limits of its statutory toolkit.

Role in the AML/CFT architecture

• Nodal intelligence hub: collects Suspicious Transaction Reports and other prescribed reports from reporting entities — banks, NBFCs, intermediaries and, since March 2023, VDA SPs [1].
• Regulatory enforcer under Section 13, PMLA: the Director may call for records, issue notices and impose monetary penalties — as with the ₹9.27 crore penalty on Bybit Fintech Ltd [4].
• Coordination node: signs MoUs with domestic regulators and anchors India's obligations under global FATF standards on virtual assets.
• Complementary, not investigative: it feeds intelligence to the Enforcement Directorate, which prosecutes PMLA offences.

Adequacy of powers over non-resident providers

• Strengths: registration is activity-based, not presence-based — any entity serving Indian users must register [1][2]. FIU-IND also acts as nodal officer under the IT Act, 2000, enabling app/URL takedown, used against nine offshore VDA SPs including Binance and Kraken in December 2023 [3].
• Limits: monetary penalties are hard to realise against entities with no Indian assets; enforcement effectively collapses into ISP-level blocking, which VPNs and mirror sites can circumvent.
• Successive rounds — 9 (2023), 25 (2025), 15 (2026) [1][2][3] — and only 50 registered VDA SPs [1] indicate a persisting compliance gap.
• Takedown depends on inter-ministerial coordination with MeitY, adding procedural lag.

FIU-IND thus forms the analytical backbone of India's AML/CFT regime, but its writ over borderless platforms rests on intermediary blocking rather than direct sanction. Strengthening mutual legal assistance, aligning penalties with FATF's Travel Rule, and incentivising voluntary registration would convert episodic enforcement into durable compliance — advancing the transparent financial order the PMLA envisages.