A recent Financial Action Task Force (FATF) report has highlighted instances where India has taken action against offshore Virtual Asset Service Providers (oVASPs) to counter money laundering and terror financing threats.
The March 2026 report on ‘Understanding and Mitigating the Risks of Off-shore Virtual Asset Service Providers’ has discussed India’s regulatory perimeter, enforcement actions, and detection tools. It has also noted India’s ongoing efforts to set up a “Virtual Asset Lab” to enable continuous detection of unregistered and high-risk platforms using analytics, open-source intelligence, and automated web surveillance.
The report states that the Indian Financial Intelligence Unit (FIU) has been leveraging Suspicious Activity Reports (STRs) from domestic VASPs. A prominent instance quoted pertains to “scam compounds”.
Registered Indian VASPs detected unusual deposit patterns from offshore wallets and filed STRs. The FIU analysis revealed that oVASPs were being used to convert illicit proceeds into Virtual Assets (VAs) and then routed through registered Indian VASPs to domestic accounts as real money.
The NIA, CBI, and the ED are probing offshore scam compounds along the Myanmar-Thailand border, in Cambodia, and Laos, where illegally trafficked Indian citizens were forced to commit cybercrimes.
