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Introduction: The Financial Intelligence Unit-India (FIU-IND) has wielded its authority under the Prevention of Money Laundering Act (PMLA), 2002, penalizing Paytm Payments Bank Ltd with a hefty sum of Rs. 5.49 crore. This action stems from identified violations of PMLA obligations and associated regulations.

Detailed Analysis: FIU-IND’s move followed a meticulous review triggered by specific intelligence from law enforcement agencies. The focus was on entities involved in illicit activities, particularly online gambling, with their ill-gotten gains funneled through accounts held at Paytm Payments Bank Ltd. The bank was issued a compliance Show Cause Notice citing breaches of various PML Rules, including those related to anti-money laundering (AML), counter-terrorist financing (CFT), and know your customer (KYC) safeguards.

Scrutinizing the evidence, FIU-IND found Paytm Payments Bank Ltd guilty of violations under multiple rules, such as Rules 7(3), 2(1)(g), Rule 8(2), Rule 3(1)(D), Rule 9(12), and Rule 9(14). The charges included failure to comply with AML/CFT/KYC safeguards concerning payout services and beneficiary accounts.

Despite Paytm Payments Bank Ltd’s submissions, the Director, FIU-IND, based on comprehensive material, substantiated the charges. Consequently, through an order dated March 1st, 2024, invoking powers under Section 13, PMLA, a substantial penalty of Rs. 5.49 crore was imposed.

Conclusion: The FIU-IND’s decisive action against Paytm Payments Bank Ltd serves as a stern reminder of the regulatory commitment to combat money laundering and illicit financial activities. This incident underscores the importance of financial institutions adhering to stringent AML/CFT/KYC measures, with non-compliance incurring severe penalties. The repercussions of this penalty on Paytm Payments Bank Ltd are not only financial but also impact its reputation in the broader financial landscape.

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Ministry of Finance

Financial Intelligence Unit-India (FIU-IND) imposes penalty of Rs. 5,49,00,000 on Paytm Payments Bank Ltd with reference to violations of its obligations under PMLA

Posted On: 01 MAR 2024 6:48PM by PIB Delhi

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.

Paytm Payments Bank Fined Rs. 5.49 Crore by FIU-IND for PMLA Violations

FIU-IND initiated a review of the Paytm Payments Bank Ltd on receipt of specific information from law enforcement agencies in respect of 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 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.

After considering the written and oral submissions of the Paytm Payments Bank Ltd, Director, FIU-IND, based on the voluminous material available on record, found that the charges against Paytm were substantiated. Consequently, vide order dated March 1st, 2024 in exercise of his powers under Section 13, PMLA, it was found to be appropriate to impose a penalty of Rs. 5,49,00,000.

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