India’s Financial Intelligence Unit (FIU) has imposed a fine of Rs. 5,49,00,000 (approximately $662,565) on Paytm Payments Bank for violating reporting laws related to illegal money transactions that went through its accounts. The FIU initiated a review of Paytm Payments Bank after receiving information from law enforcement agencies regarding certain entities that were involved in illegal activities, including online gambling.
The proceeds from these illegal activities were routed through bank accounts maintained by these entities with Paytm Payments Bank. Unfortunately, the bank failed to report suspicious transactions and didn’t exercise due diligence on these accounts.
Although the penalty pertains to issues within a discontinued segment from two years ago, charges were substantiated based on significant evidence. The penalty amount reflects the severity of the violations and the failure to comply with anti-money laundering norms. Since then, Paytm has enhanced its monitoring systems and reporting mechanisms to the FIU.
In February, the Reserve Bank of India (RBI) directed Paytm Payments Bank to wind down operations by March 15 due to ongoing compliance issues and supervisory concerns. Paytm received notices for information and explanations from authorities, including the financial crime-fighting agency Enforcement Directorate.
Paytm CEO Vijay Shekhar Sharma owns a 51% stake in Paytm Payments Bank. The company has taken measures to address compliance concerns, including cutting ties with its payments bank unit. Recently, Sharma stepped down as non-executive chairman and board member of the payments bank unit as part of a significant overhaul.
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