Paytm Faces ₹5.49 Cr Penalty by FIU

Paytm Payments Bank, a subsidiary of One97 Communications, has been slapped with a hefty penalty of Rs 5.49 crore by the Financial Intelligence Unit-India (FIU-IND) for violating its obligations under the Prevention of Money Laundering Act (PMLA), the Finance Ministry announced on Friday.

What are the violations?

According to the ministry, the FIU-IND initiated a review of the Paytm Payments Bank after receiving specific information from law enforcement agencies about some entities and their network of businesses engaged in illegal activities, such as online gambling, and routing their proceeds of crime through bank accounts maintained by them with the Paytm Payments Bank.

The FIU-IND found that the Paytm Payments Bank had failed to report these suspicious transactions to the FIU-IND as required by the PMLA. The bank also failed to maintain records of these transactions and verify the identity of its customers and beneficiaries as per the PMLA norms.

What are the consequences?

The FIU-IND imposed a penalty of Rs 5.49 crore on the Paytm Payments Bank for these violations, which is equivalent to three times the amount involved in these transactions. The penalty has to be paid within 45 days from the date of receipt of the order.

The FIU-IND also warned the bank to take corrective measures to prevent recurrence of such violations and ensure compliance with the PMLA provisions in future.

How has Paytm Payments Bank responded?

A spokesperson of the Paytm Payments Bank said that the penalty pertains to issues within a business segment that was discontinued two years ago. The spokesperson added that since then, the bank has enhanced its monitoring systems and reporting mechanisms to the FIU-IND.

The spokesperson also said that on Friday, Paytm and Paytm Payments Bank have mutually agreed to discontinue various inter-company agreements with Paytm and its group entities to simplify the governance structure of the bank and make it independent of its shareholders.

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