The Financial Intelligence Unit-India (FIU-IND) in furtherance of the powers conferred upon the Director FIU-IND under Section 13(2)(d) of the Prevention of Money Laundering Act, 2002 (as amended) (“PMLA”) has imposed a monetary penalty of Total ₹9,27,00,000 (Nine crore twenty-seven lakh rupees) on Bybit Fintech Limited (Bybit) a Virtual Digital Asset Service Provider (VDA SP) with reference to the violations of its obligations under the PMLA read with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (“PML Rules”) issued thereunder and applicable guidelines and advisories issued by the Director FIU-IND.

As a Virtual Digital Asset Service Provider (VDA SP), Bybit is classified as a 'reporting entity' under Section 2(1)(wa) of the Prevention of Money Laundering Act (PMLA).Bybit kept expanding its services in the Indian market without securing mandatory registration with the FIU-IND. The persistent and continuous non-compliance caused FIU-IND to block their websites to stop operations under the Information Technology Act, 2000 through the Ministry of Electronics and Communication Technology (MEITY).

It is noteworthy that FIU-IND had previously issued comprehensive Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Guidelines for Reporting Entities offering Services related to Virtual Digital Assets on March 10, 2023. Furthermore, a detailed circular regarding the registration of Virtual Digital Asset Service Providers as reporting entities was issued on October 17, 2023.

After conducting a thorough examination of both written and oral submissions from Bybit, Shri Vivek Aggarwal, the Director of FIU-IND, found Bybit liable of the charges for various violations. In an order dated January 31^st, 2025, and exercising authority under Section 13 of the PMLA, it was unequivocally established that Bybit was in violation of Section 12(1) of the PMLA read with Rule 2(1)(h),Rule 7(2),Rule 8(2) Rule 8 (4),Rule 3(1)(D) and Rule 7(3) of PMLR, 2005. Consequently, a total penalty of Rs. 9,27,00,000 was imposed on Bybit.

Regulatory non compliance: penalty against a virtual asset service provider for failing to register and breaching AML obligations. FIU IND, under powers in the PMLA, found a Virtual Digital Asset Service Provider expanded services without mandatory registration as a reporting entity and breached provisions of the PMLA, the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, and FIU IND AML/CFT guidelines. Following written and oral submissions, the Director identified violations of record keeping, customer due diligence and reporting obligations and imposed an administrative monetary penalty; the regulator also coordinated blocking of the provider's websites under the Information Technology Act to stop operations pending compliance.