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India’s Financial Intelligence Unit (FIU-IND) Friday imposed a penalty of Rs 5.49 crore on Paytm Payments Bank Ltd for violating rules under the Prevention of Money Laundering Act (PMLA).
The action comes just a month after the Reserve Bank of India (RBI) barred it from accepting deposits, credit transactions or top-ups,
FIU-IND is the financial intelligence arm of the Department of Revenue under the Ministry of Finance. It initiated a review of PPBL on information from law enforcement agencies in respect of a few entities and their network of businesses engaged in a number of illegal acts, including organising and facilitating online gambling, an official statement said.
“The money generated from these illegal operations, that is, the proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank,” the ministry statement said.
After considering the written and oral submissions of the payments bank, FIU-IND found that the charges against it were substantiated. “The penalty pertains to issues within a business segment that was discontinued two years ago. Following that period, we have enhanced our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU),” a spokesperson from Paytm said in response to the ministry’s statement.
FIU-IND issued a compliance show cause notice to the bank for the violations.
On Monday, Paytm founder Sharma had resigned as part-time non-executive chairman and board member of the payments bank. Sharma owns 51 per cent in the payments’ bank, while One97 Communications owns 49 per cent.
