Paytm Payments Bank Fined Rs 5.49 Crore for Anti-Money Laundering Violations
- ByStartupStory | March 6, 2024
Paytm Payments Bank Ltd (PPBL) has been fined Rs 5.49 crore by the Financial Intelligence Unit (FIU) for failing to establish a mechanism to detect and report suspicious transactions, as mandated by the Prevention of Money Laundering Act (PMLA). The FIU’s order, dated March 1, revealed that the charges were substantiated after over four years of investigation.
According to the FIU, Paytm Payments Bank neglected to conduct due diligence on its payout service and violated obligations under Chapter IV of the PMLA. The charges included failure to report suspicious transactions, inadequate internal mechanisms, and reliance on non-compliant third-party entities.
A spokesperson for Paytm Payments Bank responded to the penalty, stating, “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).”
The investigation into Paytm Payments Bank began in 2020, initiated by law enforcement agencies following reports of extensive illegal activities linked to a syndicate connected to a foreign state. The illegal activities involved online gambling, fraudulent services, and the remittance of proceeds abroad.
The FIU’s order outlined specific charges against Paytm Payments Bank, including its failure to file suspicious transaction reports related to beneficiary accounts and shortcomings in ongoing due diligence. The bank was fined under section 13 of the PMLA for non-compliance with its obligations.
This fine adds to the legal troubles for Paytm Payments Bank, which recently faced restrictions from the Reserve Bank, prohibiting the acceptance of fresh deposits from customers. The unfolding situation led to the resignation of Vijay Shekhar Sharma as part-time non-executive Chairman, further prompting a reconstitution of the bank’s board.
As Paytm Payments Bank navigates these challenges, it remains imperative for financial entities to adhere to anti-money laundering laws and implement robust mechanisms to safeguard against illicit financial activities.
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