Paytm Payments Bank: Financial Intelligence Unit Imposes Rs 5.49 Crore Penalty Under PMLA

The Financial Intelligence Unit-India has imposed a penalty of Rs 5.49 crore on Paytm Payments Bank Ltd.

The penalty has been imposed for violations of the bank's obligations under the Prevention of Money Laundering Act, 2002, according to a press release.

Based on a review of Paytm Payments Bank after receiving information from law enforcement agencies, FIU-IND found discrepancies in operations, it said. The unit observed that the bank engaged in a number of illegal acts, including organising and facilitating online gambling.

Money generated from such illegal operations was routed and channelled through bank accounts that were maintained by entities with Paytm Payments Bank.

On these grounds, the FIU-IND issued a show-cause notice to the bank for violation of anti-money laundering rules, check fund transfer and know-you-customer safeguards. These were particularly in respect to payout services and beneficiary accounts.

Based on submissions by the bank, the FIU-IND found charges against Paytm Payments Bank of substance.

On Feb. 3, NDTV Profit reported that inadequate KYC, which led to transactions worth crores of rupees, was one of the major reasons for the Reserve Bank of India's stringent curbs on the bank.

Material lapses were found in the conduct of payments bank. Over 1,000 users were found to have linked the same PAN to their accounts, which led to concerns of money laundering.

Earlier in the day, Paytm-operator One97 Communications Ltd. and Paytm Payments Bank agreed to discontinue various inter-company agreements to strengthen independent operations for the latter.