The Enforcement Directorate (ED) has taken significant action against money laundering through cryptocurrencies and virtual digital assets (VDAs), attaching, seizing, and freezing proceeds of crime worth ₹4,189.89 crore in several investigations. The agency has arrested 29 individuals, filed 22 prosecution complaints, and declared one accused a fugitive economic offender, the Union government informed Parliament on Monday.
Government brings VDAs under PMLA framework
Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that the government has brought VDAs under the ambit of the Prevention of Money Laundering Act (PMLA), 2002, making Virtual Asset Service Providers (VASPs) reporting entities. These entities must now submit specified transaction reports and suspicious transaction reports to FIU-IND, enabling monitoring and coordinated action against digital asset–linked financial crimes.
The reports generated through this system are analysed and shared with law enforcement agencies, strengthening oversight of a sector that has seen rapid growth alongside rising misuse.
Other financial laws apply to VDAs
The minister said that the Prohibition of Benami Property Transactions Act, 1988, and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, also apply to all assets, including VDAs. These frameworks enable authorities to act against undisclosed holdings and cross-border financial irregularities involving crypto assets.
CBDT detects significant tax evasion linked to VDAs
The Central Board of Direct Taxes (CBDT) has uncovered multiple cases of tax evasion related to cryptocurrency and VDA transactions. During search and seizure operations, undisclosed income amounting to ₹888.82 crore has been identified.
As part of its NUDGE (Non-Intrusive Usage of Data to Guide and Enable) campaign, the department has issued 44,057 communications to taxpayers who traded or invested in VDAs but failed to report these transactions in Schedule VDA of their Income Tax Returns (ITRs).
Advanced data analytics tools, Project Insight, TDS returns filed by VASPs, and internal databases are being used to match VDA transaction activity with taxpayer disclosures to detect discrepancies and enable corrective action.
Capacity building to track crypto-linked crimes
The government is investing in capacity-building measures to enhance monitoring and investigation of VDA transactions. Chaudhary said that training programmes, workshops, Chintan Shivirs, and sessions on digital forensics, blockchain analysis, legal frameworks, and digital evidence are being conducted regularly.
Officers are also receiving specialised short-term training through the National Forensic Sciences University (NFSU), Goa, enabling them to identify and trace crypto-related transactions using captured digital data.
Strengthening regulatory vigilance
The government’s multi-pronged approach — strengthening legal frameworks, enhancing inter-agency coordination, upgrading forensic capabilities, and using big data tools — reflects a growing recognition of the need to regulate virtual asset ecosystems that have become both technologically complex and financially significant.
Officials said investigations into crypto-linked crimes are ongoing, and further enforcement action is expected as agencies refine their monitoring architecture.