Financial Intelligence Unit Imposes Penalty of Over Rs. 5 Crore on Paytm Payments Bank

India’s Financial Intelligence Unit (FIU) on Friday imposed a penalty of Rs. 5,49,00,000 ($662,565) on Paytm’s banking arm, Paytm Payments Bank, for violations in reporting unlawful cash routed by means of its accounts, the nation’s finance ministry stated.

The FIU initiated a assessment of Paytm Payments Bank after info from regulation enforcement companies about some entities engaged in unlawful acts, together with organising and facilitating on-line playing, and routing proceeds by means of the financial institution.

“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,” the ministry stated in an announcement.

The funds financial institution did not report suspicious transactions and conduct due diligence of those accounts, the FIU’s order stated.

Based on the “voluminous” materials accessible on report, it discovered that the costs towards Paytm Payments Bank had been substantiated, the ministry added.

The penalty pertains to points inside a enterprise section that was discontinued two years in the past, a spokesperson for Paytm Payments Bank stated. The firm has since enhanced its monitoring methods and reporting mechanisms to the FIU, the spokesperson added.

Earlier in February, the Reserve Bank of India (RBI) had requested Paytm Payments Bank to wind down operations by March 15 as a result of persistent compliance points and supervisory considerations.

Paytm had earlier stated that it obtained notices for info and explanations from the authorities, together with the monetary crime combating company Enforcement Directorate, and was offering them the identical.

Meanwhile, Paytm has reduce some ties with its funds financial institution unit in an try to handle compliance considerations that triggered a meltdown in its shares final month.

Paytm CEO Vijay Shekhar Sharma owns a 51 % stake in Paytm Payments Bank, whereas Paytm owns the remainder.

Earlier this week, Sharma stepped down as non-executive chairman and board member of the funds financial institution unit, as a part of a significant overhaul.

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