Case Law Details
Paypal Payments Private Limited Vs Financial Intelligence Unit India (Delhi High Court)
The Petitioner in the present petition challenges the impugned order dated 17th December, 2020, passed by the Director, Financial Intelligence Unit-India, Ministry of Finance, Government of India. By the impugned order, the Petitioner has been held to be a ‘reporting entity’ and a ‘payment system operator’, under Section 2(1)(wa) and Section 2(1)(rc) of the Prevention of Money Laundering Act, 2002 (hereinafter, ‘PML Act’). Further, the impugned order finds the Petitioner guilty of violations under the provisions of the PML Act, and has imposed a penalty amounting to Rs.96 Lakhs. The impugned order, thereafter, directs the Petitioner to register itself as a “reporting entity” with the Financial Intelligence Unit-India (hereinafter, “FIU-IND”) as well as to appoint a Principal Officer and communicate the name, designation and address thereof, within a period of 15 days of the receipt of the said order.
This court is of the opinion that the question as to whether a business like the Petitioner’s, which is of recent origin in India. ought to fall within the ambit of a `payment system’ and whether the Petitioner would be a `payment system operator’ and a `reporting entity’, requires consideration
As per ld. counsels, there is no other payment gateway entity which has been brought under the PML Act. Under the facts and circumstances of the present case, it is deemed appropriate to implead Reserve Bank of India as Respondent No.2.
The stand of the RBI in the affidavit referred above appears to be in contrast with the view taken in the impugned order. The RBI and Union of India ought to take a clear stand after due consultation as to whether they consider platforms such as that of the Petitioners as being within the purview of the PML Act. Accordingly, the Secretary, Ministry of Finance, is directed to constitute a Committee with a nominee of the RBI and the Ministry of Finance, to clarify their position as to whether companies like the Petitioners who claim to be facilitators of monetary transactions, both in foreign exchange and in Indian Rupees, ought to be categorised as “payment system operators” and hence “reporting entities” under the PML Act. Let the Committee meet within ten days and the conclusion of the Committee be filed, by way of an affidavit, within two weeks thereafter.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
