The Indian government has imposed a $1.2 million penalty on Bybit Fintech Limited (Bybit), a virtual digital asset service provider (VDA SP), for violations under the Prevention of Money Laundering Act, 2002 (PMLA).
The Financial Intelligence Unit-India (FIU-IND) levied the fine on Bybit for failing to comply with its obligations under the PMLA. Bybit continued to expand its services in the Indian market without obtaining mandatory registration with the FIU-IND, according to the agency.
“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),” stated the Ministry of Finance.
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. Additionally, a detailed circular regarding the registration of Virtual Digital Asset Service Providers as reporting entities was issued on October 17, 2023.
After a thorough examination of written and oral submissions from Bybit, FIU-IND found the company liable for various violations. Earlier this month, Bybit announced a temporary restriction on its services for Indian users.
In March 2023, the government brought crypto businesses under the provisions of the PMLA, mandating them to report suspicious transactions and conduct customer due diligence, among other requirements. Later, all virtual digital asset service providers were required to register as reporting entities with the FIU.
Last year, leading crypto exchange Binance paid $2.4 million to the government agency and resumed its operations in the country after registering with it.
This penalty underscores the importance of compliance with regulatory requirements in the rapidly evolving digital asset space, as the government continues to enforce measures to combat money laundering and ensure financial integrity.
