Due diligence procedures under section 509

This is an overview of a long procedural rule; the bare Rules carry the complete procedures.

Individual users (sub-rule 2). When establishing the relationship, or within twelve months on and from 1 January 2026 for pre-existing users, the provider obtains a self-certification allowing it to determine the individual's tax residence, and confirms its reasonableness against the information it holds, including documentation collected under anti-money-laundering or know-your-customer procedures. If circumstances change so that the provider knows or has reason to know that the self-certification is incorrect or unreliable, it must stop relying on it and obtain a valid self-certification or a reasonable explanation, with supporting documentation.

Entity users (sub-rules 3 to 6). The same self-certification and reasonableness check applies to entities. If an entity certifies that it has no tax residence, the provider relies on its place of effective management or the address of its principal office. If the self-certification indicates residence outside India, the entity is treated as a reportable user unless the provider reasonably determines that it is an excluded person. For an entity that is neither an excluded person nor an active entity, the provider determines whether it has controlling persons who are reportable persons, relying on its anti-money-laundering and know-your-customer information where those procedures are consistent with the Financial Action Task Force Recommendations (2012, as updated in June 2019) on virtual asset service providers, or applying substantially similar procedures where it is not legally required to, and relying on a self-certification to decide whether a controlling person is a reportable person.

Becoming reportable (sub-rule 1). A crypto-asset user is treated as a reportable user from the date it is identified as such under this rule.