Headline: India’s FIU orders major exchanges to preserve OTC crypto trade records over $10,000
India’s Financial Intelligence Unit (FIU) has asked at least three big crypto exchanges to turn over data on over‑the‑counter (OTC) crypto transactions exceeding USD 10,000, The Economic Times reports. The directive follows a late‑May meeting and requires exchanges to trace and preserve relevant OTC records from January 2026 onward.
Why OTC trades are in the crosshairs
OTC trades — private, off‑order‑book deals used by large buyers to avoid slippage — have long been attractive to institutions and high‑net‑worth individuals. But those same features make provenance checks harder when private companies, intermediaries or closely held entities sit between the exchange and the real source of funds. An official at a crypto intermediary told The Economic Times: “OTC players are primarily private companies where the KYC procedure can be a greater challenge compared to retail investors.”
What regulators want and why
The FIU’s request targets information that helps verify directors, controllers and ultimate beneficial owners (UBOs), as well as wallet destinations, sources of funds and post‑trade movements. These elements become critical when false documents, mule accounts or complex intermediaries obscure ownership. Once coins leave an exchange to private wallets, platforms have far less visibility and control — increasing the need for stronger pre‑ and post‑settlement checks.
How this fits into India’s broader AML push
The OTC record demand builds on measures New Delhi rolled out earlier this year. In January the FIU mandated tougher KYC — including live selfie checks, geolocation and IP tracking at onboarding — and ordered periodic customer record updates (every six or 12 months depending on risk). Regulators have also stepped up enforcement: Binance paid a $2.25 million penalty in India for AML breaches, and offshore virtual digital asset service providers that serve Indian users without FIU registration have received notices.
Legal framework and practical impact
India’s Finance Ministry says virtual digital asset service providers fall under the Prevention of Money Laundering Act (PMLA) framework, meaning they must keep records, file suspicious transaction reports and comply with FIU‑IND obligations when serving Indian users. For exchanges, the latest FIU demand likely means OTC desks will need to collect more documentation on beneficial owners, transaction purposes, sources of funds and destination wallets — both before and after settlement.
What users and OTC clients should expect
Large OTC clients — especially private companies and intermediaries — should expect slower onboarding and heavier documentation requirements for trades above the USD 10,000 threshold. Platforms may impose more rigorous checks and questions before permitting large purchases or outbound transfers to external wallets.
The bigger picture
The FIU’s move signals that India’s oversight is expanding beyond visible exchange order books into the private channels where large crypto flows often occur. Regulators are tightening the net on opaque OTC activity to strengthen AML controls across the country’s crypto ecosystem.
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