Paytm Payments Bank has been fined Rs 5.49 crore over alleged money laundering in the latest setback to the fintech, a month after the Reserved Bank of India (RBI) ordered it to stop accepting any fresh deposits in its accounts or wallets from February 29. That deadline was extended to March 15.
The Financial Intelligence Unit-India (FIU-IND) in a statement said it reviewed Paytm Payments Bank after getting information from law-enforcement agencies over alleged illegal acts including online gambling.
The FIU-IND said some entities routed these funds through Paytm Payments Bank, which violated provisions of the Prevention of Money Laundering Act (PMLA).
“… The money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts maintained by these entities with Paytm Payments Bank Ltd,” the FIU-IND said.
A Paytm Payments Bank spokesperson said the penalty pertains to issues within a business segment that was discontinued two years ago. “Following that period, we have enhanced our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU),” the spokesperson said.
Following the RBI order last month, Paytm had shifted its nodal account to Axis Bank (by opening an escrow account) to continue seamless merchant settlements as before. It had then insisted that its QR codes, soundbox and card machines would continue to work beyond the RBI’s March 15 deadline.
The deadline extension, the RBI said, was to allow customers, including merchants, “a little more time” to make alternative arrangements.
The RBI said no further deposits or credit transactions or top-ups will be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc after March 15.
Customers can withdraw or use funds from their Paytm Payments Bank accounts and wallets until the time those funds are exhausted, but they cannot add any fresh funds after March 15, it added.
Paytm Payments Bank has nearly a fifth share of India’s toll collections through a product called FASTag. The RBI said these FASTags cannot be recharged or topped up after March 15.
Paytm is the third-largest app for UPI payments in the country, processing 1.6 billion monthly transactions, according to data available on the NPCI website. PhonePe and Google Pay are the two largest.
