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Vauld's business in India did not do due diligence on monies supplied through the exchange and was in violation of India's Enforcement Directorate.
Crypto Lender Vauld, located in Singapore, faces money laundering accusations in India after $46.5 million (3.70 billion Indian rupees) was frozen from its Indian subsidiary, Flipvolt Technology.
In a statement issued on August 12, India's Enforcement Directorate (ED) announced that it is investigating Vauld (Flipvolt Technologies) and Yellow Tune Technologies for allegedly facilitating illicit payments via the cryptocurrency exchange.
According to the regulator, 23 ED-investigated organizations placed 3.70 billion rupees into Yellow Tune's cryptocurrency wallet, which was then transmitted to overseas wallet addresses without following proper procedures or filing suspicious transaction reports (STRs).
The assertion confirmed:
Yellow tune, with the aid of the Flipvolt Crypto-Exchange, which has very lax KYC norms, no EDD mechanism, no check on the source of funds of the depositor, no mechanism of raising STRs, etc., assisted the accused fintech companies in avoiding regular Banking channels, and took out all the fraud funds in the form of crypto assets with ease.
The Indian Authority accused the exchange of treating the situation with indifference. It failed to give the authorities with KYC credentials for the wallets and was unable to account for Yellow Tune's cryptocurrency transactions.
It has made no genuine attempts to track down these digital assets. By fostering anonymity and having inadequate AML regulations, it actively supported M/s Yellow Tune in laundering Rs 370 Crore worth of criminal profits via the cryptocurrency channel.
Therefore, the Vauld-owned Indian exchange will forfeit the laundered funds unless it produces a full response against the accusations.
The Enforcement Directorate of India has spoken out against money laundering.
Earlier, the Enforcement Directorate (ED) of India initiated an inquiry into the actions and compliance of non-banking financial firms (NBCFs) with Reserve Bank of India regulations.
The inquiry report revealed that several insolvent fintech firms laundered their earnings using cryptocurrency. The cryptocurrency exchanges implicated in the investigation reportedly failed to do due diligence prior to assisting the companies in sending the monies to overseas wallets.
The Economic Times of India reports that the ED is investigating about ten cryptocurrency exchanges for aiding the laundering of more than 130 million dollars.
As a result, the ED raided Wazirx's region on August 5 to freeze around $8 million belonging to the exchange. WazirX is rumored to have assisted in the conversion of Indian rupees to cryptocurrency before sending the monies to overseas accounts via Binance.
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