Paytm fined for money laundering: The Financial Intelligence Unit-India (FIU-IND) of the Union Ministry of Finance has imposed Rs 5.49 crore worth penalty on Paytm Payments Bank for violating anti-money laundering rules. A statement issued by the centre said FIU-IND started a review of Paytm Payments Bank after specific information was received from law enforcement agencies regarding few entities and their network of businesses engaged in a number of illegal acts, including organising and facilitating online gambling.

As per the Finance Ministry, money generated from these illegal operations,  and proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank Ltd, the official communique said.

“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 (PMLA), 2002, has imposed a monetary penalty of Rs. 5,49,00,000 (rupees five crore forty nine lakh) on Paytm Payments Bank Ltd 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,” said the official statement. 

Penalties on old issues: Paytm 

A review of Paytm Payments Bank Ltd was initiated by the FIU-IND on receipt of specific 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. Further, the money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank Ltd.

In a statement issued, Paytm Payments Bank spokesperson said, "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).'

Meanwhile, in stock market trading activity on Friday, shares of Paytm parent One97 Communications Ltd rose 4.99 per cent to an intraday high of Rs 423.45 apiece on the National Stock Exchange (NSE) on Friday, March 1, 2024.

FEMA Violations

Almost 5 per cent comes after One97 Communications announced the discontinuation of various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL). The decision was approved by the Board of Directors on March 1, 2024, as per an exchange filing by the company.

Reacting to the penalty on Paytm, financial expert Kishore Subramanian said violations of the Foreign Exchange digital payments space and a rampant increase in cyber financial crimes, the role of Know Your Customer (KYC) process becomes imminent. 

“It’s this friction that helps businesses identify potential instances of fraud, identity theft, and other financial crimes,” said the financial expert Subramanian, while pointing to a recent RBI regulation.