CRITICAL ANALYSIS OF PLMA’S EFFICACY IN CRYPTO-RELATED MONEY LAUNDERING

AUTHOR – RAAJ SHEKHAR CHOTALIA* & DR. PRIYANKA TAKTAWALA**

* STUDENT AT UNITEDWORLD SCHOOL OF LAW, KARNAVATI UNIVERSITY

** ASSOCIATE PROFESSOR AT UNITEDWORLD SCHOOL OF LAW, KARNAVATI UNIVERSITY

BEST CITATION – RAAJ SHEKHAR CHOTALIA* & DR. PRIYANKA TAKTAWALA, CRITICAL ANALYSIS OF PLMA’S EFFICACY IN CRYPTO-RELATED MONEY LAUNDERING, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (5) OF 2025, PG. 195-211, APIS – 3920 – 0001 & ISSN – 2583-2344

ABSTRACT

The research paper explores the evolving landscape of cryptocurrency regulation, focusing on the challenges and responses of various jurisdictions, particularly India, the United States, and the European Union. It highlights the legislative and regulatory shortcomings in defining “virtual assets” under India’s Prevention of Money Laundering Act (PMLA), which has led to enforcement challenges and regulatory arbitrage. The paper contrasts India’s ambiguous framework with the EU’s Markets in Crypto-Assets (MiCA) Regulation and Singapore’s Payment Services Act, which offer more precise classifications and robust enforcement mechanisms. The study underscores the importance of adopting a risk-based approach (RBA) as advocated by the Financial Action Task Force (FATF), emphasizing the need for countries to identify and mitigate sector-specific risks. It also examines the technical limitations in tracking blockchain transactions, which hinder anti-money laundering (AML) efforts globally. The paper discusses the role of advanced analytics and international collaboration in overcoming these barriers, citing examples like the WazirX scandal and the Lazarus Group heists. Furthermore, it analyzes the United States’ Bank Secrecy Act (BSA) and its limitations in addressing the nuances of digital assets, despite its rigorous AML frameworks. The research concludes by recommending legislative reforms, technological integration, and global cooperation to enhance the effectiveness of crypto regulation. It advocates for a balanced approach that fosters innovation while ensuring security, drawing lessons from jurisdictions like the EU and Singapore. The paper calls for harmonized global action to address the challenges posed by the borderless nature of cryptocurrencies, warning that without such efforts, the financial system remains vulnerable to exploitation.