The Financial Intelligence Unit imposed a fine of over Rs. 5 Crore on Paytm Payments Bank

India’s Financial Intelligence Unit (FIU) imposed a fine of Rs 1 crore on Friday. 5,49,00,000 ($662,565) on Paytm banking arm, Paytm Payment BankThe country’s finance ministry said for violations in reporting illegal money sent through its accounts.

The FIU initiated a review of Paytm Payments Bank following information from law enforcement agencies about certain entities engaged in illegal activities, including organizing and facilitating online gambling, and the bank’s Routing the amount through

“The proceeds of these illegal activities, i.e. proceeds of crime, were transferred by these entities through bank accounts maintained with Paytm Payments Bank,” the ministry said in a statement. said in the statement.

The FIU order said that the payments bank failed to report suspicious transactions and take proper precautions of these accounts.

The ministry added that based on “substantial” material available on record, it found the allegations against Paytm Payments Bank to be substantiated.

A spokesperson for Paytm Payments Bank said the penalty was related to issues within the business unit that was closed two years ago. The company has since enhanced its monitoring system and reporting mechanism to the FIU, the spokesperson added.

In early February, the Reserve Bank of India (RBI) had asked Paytm Payments Bank to cease operations by March 15 due to ongoing compliance issues and supervisory concerns.

Paytm had earlier said it had received notices seeking information and clarification from authorities, including the Financial Crimes Enforcement Directorate, and was providing them.

Meanwhile, Paytm has severed some ties with its payments bank unit in a bid to address compliance concerns that led to a slump in its shares last month.

Paytm CEO Vijay Shekhar Sharma owns 51 percent stake in Paytm Payments Bank, while Paytm holds the rest.

Earlier this week, Sharma resigned as non-executive chairman and board member of the payments bank unit, as part of a major reshuffle.

© Thomson Reuters 2024

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