Internal Security·Prelims Strategy

Cryptocurrency and Money Laundering — Prelims Strategy

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Version 1Updated 7 Mar 2026

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Prelims Strategy

For Prelims, focus on factual accuracy and conceptual clarity. Vyyuha's analysis indicates that questions often test definitions, key terms, and the application of legal provisions. Master the basic concepts of cryptocurrency (blockchain, decentralization, pseudonymity) and money laundering (placement, layering, integration).

Crucially, memorize the relevant Indian legal frameworks: PMLA (especially the 2023 notification bringing VDAs under its ambit), FEMA, and the IT Act. Understand the role of key agencies like the ED and FIU-IND.

Pay close attention to recent developments: the Finance Act 2022's taxation framework (30% tax, 1% TDS), the RBI's stance on private cryptocurrencies versus its Digital Rupee, and FATF recommendations like the 'Travel Rule'.

Be prepared for questions on specific tools used in crypto money laundering (mixers, privacy coins) and their purpose. Practice MCQs that test your understanding of the 'Cryptocurrency-AML Paradox' – how blockchain's transparency coexists with user pseudonymity.

Focus on 'what' and 'how' questions, such as 'What is a VASP?' or 'How does TDS aid in tracing crypto transactions?'.