India mandates biometric selfie and geo-tracking in crypto KYC overhaul

India is host to a number of developments, as it updates regulations on crypto exchanges. Meanwhile, AI-powered fraud detection in UPI is being touted as the future, and prepaid identity cards for students and drivers show how payments and identity are being connected.

While cryptocurrencies have been touted for their anonymity-preserving capabilities, India is making it far harder for crypto exchanges to keep their customers untraceable.

India’s Financial Intelligence Unit (FIU) has introduced sweeping new Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements for cryptocurrency exchanges.

The measures tighten onboarding protocols with biometric and geolocation checks. The guidelines classify exchanges as Virtual Digital Asset (VDA) service providers under the Prevention of Money Laundering Act (PMLA).

Exchanges must now implement liveness detection during user registration, requiring customers to capture a live selfie validated through eye-blinking or head movement.

Designed to thwart static image spoofing and deepfake attacks, biometric liveness detection tests are growing in popularity across Asia, such as in Thailand, to combat fraud and identity theft.

Platforms must also log latitude and longitude coordinates, IP address, date, and timestamp of account creation, embedding geographical traceability into the KYC process.

Beyond Permanent Account Number (PAN) submission, users must provide a secondary identity credential — passport, Aadhaar or Voter ID — alongside OTP verification of both email and mobile phone number. A nominal transaction will confirm bank account ownership and activity.

The FIU mandates periodic KYC refreshes. This equates to every six months for high-risk clients and annually for others, reports Times of India. Enhanced due diligence applies to politically exposed persons (PEPs), entities linked to tax havens, jurisdictions on the FATF grey/blacklists, and non-profit organizations.

Exchanges are instructed to leverage open-source intelligence and independent databases to assess risk profiles. The regulator has taken notice of mechanisms that obscure transaction trails. Initial Coin Offerings (ICOs) and Initial Token Offerings (ITOs) are “strongly discouraged,” with the FIU citing their lack of economic rationale and heightened exposure to money laundering and terror financing.

Similarly, anonymity-enhancing tokens, tumblers and mixers, which obfuscate transaction origins, must not be facilitated and should trigger risk mitigation protocols.

All crypto exchanges operating in India must register as reporting entities, file suspicious transaction reports and maintain client identity, address and transaction records for at least five years or until investigations conclude. While crypto assets remain outside the definition of legal tender in India, they are subject to taxation under the country’s income tax law.

NPCI believes AI will be at the heart of India’s payments future

India’s National Payments Corporation of India (NPCI) is reshaping digital public infrastructure (DPI) with its real-time payments ecosystem, led by the Unified Payments Interface (UPI).

Processing more than 20 billion transactions a month worth over $280 billion, UPI alongside IMPS and RuPay has become one of the largest payment networks globally.

NPCI Chief Technology Officer Vishal Anand Kanvaty says the challenge is embedding intelligence, resilience and trust into systems that run continuously at national scale.

“At this [scale], consistency, reliability, and user experience can only be sustained through deep analytics and continuous, data-driven visibility across the ecosystem,” Kanvaty told Express Computer.

At the Global Fintech Festival 2025, NPCI unveiled UPI HELP, an AI-powered assistant trained on payments data to streamline queries and complaint resolution. Advanced analytics also enable fraud detection, with graph-based models identifying suspicious networks in real time.

Open APIs have driven adoption, allowing seamless interoperability across banks and fintechs. Today, UPI supports 500 million users, 65 million merchants and 700 million QR codes, accounting for 85 percent of India’s retail digital payments. Its reach now extends internationally, with acceptance in Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka and the UAE.

Security remains a priority, with biometric authentication and AI-driven risk engines driving defence against rising fraud. Predictive analytics and real-time dashboards further bolster resilience.

Looking ahead, NPCI is investing in cloud-native architectures, blockchain, Graph AI and IoT payments, while piloting AI copilots to support engineers. Its cross-border strategy emphasises regulatory compliance and data sovereignty.

Kanvaty says NPCI’s mission is clear: “The next decade will be defined by payment infrastructure that is secure, interoperable, and regulator-aligned. Our focus is on building systems that nations can trust — at scale.”

NPST and Infinity Infoway connect identity and payments for students and drivers in India

Students and bus drivers across India may soon find their identity cards doubling as payment cards, thanks to a new partnership between Network People Services Technologies (NPST) and Infinity Infoway.

The initiative aims to simplify everyday transactions on campuses and at fuel stations by embedding digital payments directly into ERP-managed identity credentials.

The rollout will begin with controlled deployments in select educational institutions and enterprises before expanding nationwide in phases, according to partner requirements and regulatory guidelines. NPST has also partnered with NSDL Payment Bank to handle transaction settlements.

At the core of the solution is NPST’s TimePay Prepaid Card, integrated with Infinity Infoway’s ERP platform. This combination transforms student IDs, employee IDs and driver IDs into secure prepaid credentials.

“By embedding payments directly into identity credentials, TimePay enables institutions to digitise everyday transactions while retaining control, compliance, and transparency,” said Deepak Chand Thakur, CEO and co-founder of NPST.

Infinity Infoway’s founder and MD, Bhavesh Gadhethariya, added: “Together, we aim to build a single identity-based, infinite payments ecosystem for students, employees, and drivers.”

For schools and colleges, the platform allows parents to preload funds for their children (sorry, kids). Payments can be restricted to approved categories such as canteens, bookstores and transport services. The system also supports identity management, administration and reporting via a unified ERP framework.

Transport companies and fleet operators will be smiling as driver-issued identity cards can be configured for use only at authorized fuel stations or specific expense categories, with spending limits set by operational policies.

Article Topics

AML  |  biometric payments  |  biometrics  |  digital payments  |  financial services  |  India  |  KYC  |  Unified Payments Interface - UPI