Jun 30, 2021

Customer Due Diligence for Transactions in Virtual Currencies

The RBI by its Circular dated May 31, 2021 noted that certain banks / regulated entities were cautioning their customers against dealing in virtual currencies by making references to a previous circular of the RBI, which was challenged before the Supreme Court in the 2018 case of Internet and Mobile Association of India v. RBI[1] and was set aside by the Supreme Court by its order dated March 4, 2020. The RBI cautioned banks and regulated entities from citing the previous circular as it was not valid from the date of the Supreme Court’s order. However, RBI clarified that banks and other entities to whom the Circular is addressed are allowed to carry out customer due diligence in accordance with regulations governing standards for Know Your Customer, Anti-money Laundering, Combating of Financing of Terrorism and obligations of regulated entities under Prevention of Money Laundering Act, 2002, and will ensure compliance with the Foreign Exchange Management Act, 1999 for overseas remittances.


[1] Civil No. 528 of 2018.




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