Illicit drug deals: 3 digital asset management cos under radar for transactions worth Rs 28,000 crore

Three digital asset management companies have come under the scanner of the investigative agencies, including the Enforcement Directorate and the income tax department, following an alert by the Financial Intelligence Unit (FIU) about their alleged role in illicit drug transactions worth ₹28,000 crore.

"Digital currency was used to buy and sell drugs and some of these companies facilitated it," a senior government official told ET. "So far the agency has been able to track transactions worth ₹28,000 crore."

Most of the transactions were carried out through three digital asset management companies and were not reported to the authorities.


Detailed findings have been sent to the Enforcement Directorate to look into the money laundering aspect and to the income tax department to probe tax evasion by the entities involved.

The FIU has zeroed in on about 200 transactions that were carried out in the Cayman Islands, the British Virgin Islands and Nigeria using digital currencies and routed via exchanges located in India, the official said.

"These transactions took place between 2019 and 2021," the person said, without divulging the names of the three companies as the probe is still on.

The FIU is keeping close tabs on transactions in digital currencies, the official said.

Opacity of Transactions
Last month, the Hyderabad Narcotic Enforcement Wing arrested drug traffickers operating in the dark web through illegal cryptocurrency transactions.

As per industry estimates, over 7% of India's population owns digital currency. The use of cryptocurrencies surged globally at an unprecedented rate after the Covid-19 pandemic broke out.

Policymakers in India and overseas have been wary about the opacity of such transactions and the functioning of entities that do not face any regulatory oversight.

Finance minister Nirmala Sitharaman, during her recent visit to the US, made a strong case for regulating cryptocurrencies at a global level to mitigate the risk of money laundering, drug trafficking and terror funding, a concern that was shared by many other countries.