Financial Intelligence Unit imposes penalty on Paytm Payments Bank

Paytm Payments Bank news: The government on Friday imposed a penalty of Rs 5.49 crore on Paytm Payments Bank, citing violations of obligations under the Prevention of Money Laundering Act (PMLA).

The Financial Intelligence Unit-India, under the Finance Ministry's Department of Revenue, initiated a review of Paytm Payments Bank 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", the ministry said.

The FIU is the national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to enforcement agencies, and its foreign counterparts.

"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 furtherance of the above and upon scrutiny of the documents on record, FIU IND issued a compliance Show Cause Notice to the bank for its violations of (i) Rules 7(3) and 2(1)(g), PML Rules; (ii) violation of Rule 8(2) read with Rule 3(1)(D) and Rule 2(1)(g); (iii) violation of Rule 9(12), PML Rules; and (iv) violation of Rule 9(14) in terms of AML / CFT / KYC safeguards in respect of Payout services; and AML / CFT / KYC in respect of beneficiary accounts," the ministry added. 

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After considering the written and oral submissions by Paytm Payments Bank, the FIU found that the charges against Paytm were substantiated based on the voluminous material available on record, the ministry added.

"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 Paytm Payments Bank spokesperson said.

Paytm Payments Bank is already under the RBI's lens over persistent non-compliance and continued material supervisory concerns.

Paytm parent One97 Communications' shares ended 5.0 per cent higher at Rs 425.5 apiece earlier on Friday after the company said that it along with its associate entity, Paytm Payments Bank, had introduced additional measures to strengthen their approach towards independent operations of the payments bank.

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"As part of this process to reduce dependencies, Paytm and PPBL have mutually agreed to discontinue various inter-company agreements with Paytm and its group entities," One97 Communications, which owns and operates digital payments firm Paytm, said in a regulatory filing. ​