New Delhi – Paytm Payments Bank has been slapped with a penalty of ₹5.49 crore by the Financial Intelligence Unit-India (FIU-IND) over allegations of money laundering. This comes a month after the Reserve Bank of India (RBI) directed the bank to stop taking fresh deposits starting February 29. The deadline was later extended to March 15.
The FIU-IND said its review of Paytm Payments Bank revealed that some entities had allegedly routed proceeds from illegal activities like online gambling through accounts maintained with the bank. This violated the Prevention of Money Laundering Act (PMLA).
“The money generated from these illegal operations, i.e., proceeds of crime, were routed and channeled through bank accounts maintained by these entities with Paytm Payments Bank,” the FIU-IND statement said.
In response, a Paytm Payments Bank spokesperson stated that the penalty relates to issues in a business segment discontinued two years ago. The spokesperson added that FIU’s monitoring systems and reporting mechanisms have improved since then.
After the RBI order last month, Paytm had shifted its nodal account to Axis Bank by opening an escrow account. This allowed it to continue seamless settlements for merchants as before. Paytm had insisted that its QR codes, soundbox, and card machines would function normally beyond the March 15 deadline.
The RBI said the deadline extension provided customers and merchants more time to make alternative arrangements. It made clear that no further deposits, credits, or top-ups will be allowed in Paytm Payment Bank accounts, wallets, FASTags, etc, after March 15.
Paytm Payments Bank has nearly one-fifth of India’s toll collections through FASTag. The RBI stated these FASTags cannot be recharged after the cutoff date.
Paytm is the third largest UPI payments app in India, processing 1.6 billion monthly transactions as per NPCI data.
