India IN

India's virtual-asset AML architecture tightened materially this cycle. FIU-IND imposed a penalty of INR 9.27 crore on Bybit Fintech Limited on 31 January 2025 for operating as a Virtual Digital Asset Service Provider without the mandatory FIU-IND registration that has been in force under the Prevention of Money Laundering Act's reporting-entity framework since March 2023. The action was compounded by coordinated website blocking, executed via MeitY under the Information Technology Act, 2000, that removed Bybit's access to Indian users pending registration compliance; Bybit subsequently registered and resumed operations. Read architecturally rather than as an isolated incident, this sequence confirms that FIU-IND registration operates as a functional substitute for a licensing statute India has not enacted: an unregistered virtual-asset service provider faces both a financial penalty and a coordinated technical-access denial, a two-pronged enforcement mechanism combining a financial regulator's punitive power with an internet-infrastructure regulator's blocking power.

The reach of this mechanism now extends beyond domestically incorporated platforms. Secondary reporting indicates that FIU-IND issued show-cause notices in October 2025 to approximately 25 offshore virtual digital asset exchanges — BingX, LBank, CoinW, CEX.IO and Poloniex among them — for serving Indian users without registration. This is the extraterritorial application of the same registration-gate logic used domestically against Bybit, and it signals that FIU-IND does not treat offshore incorporation as a barrier to its enforcement reach. The registered reporting-entity count is reported to have grown from 49 as of FY2024-25 to approximately 54 by mid-2026, though the precise current figure remains contested between sources and should be treated as an approximate range pending reconciliation.

This enforcement architecture sits against a backdrop of standing baseline facts: India's VASP AML gate operates via FIU-IND registration rather than a dedicated licensing statute, and India itself remains outside both the FATF grey list and black list as of the June 2026 Plenary, sitting in the regular follow-up category from its most recent Mutual Evaluation. The three-pillar balance principle is worth applying here: this cycle's signal is overwhelmingly AML-registration enforcement, with no CTF- or CPF-specific development identified for India in the claims available. That is itself worth noting rather than treating as a gap in coverage — the absence of a CTF-specific signal in a cycle otherwise rich in AML enforcement activity is a data point about where India's current enforcement emphasis sits, not an omission by this brief.

Outlook

Watch for resolution of the roughly 25 offshore show-cause notices issued in October 2025: whether named exchanges register and resume operation, following the pattern Bybit set, or exit the Indian market instead, will be the clearest near-term signal of how this extraterritorial enforcement campaign concludes. The unresolved discrepancy in the registered-VASP count between approximately 49 and approximately 54 is a reconciliation worth monitoring. No change to India's FATF standing is anticipated absent a material shift in its Mutual Evaluation follow-up status.