The Financial Intelligence Unit-India (FIU-IND) on Friday imposed a penalty of ₹5.49 crore on beleaguered Paytm Payments Bank Ltd with reference to violations of its obligations under the Prevention of Money Laundering Act.

• Also read: RBI bars Paytm Payments Bank from offering services effective March 2024

A statement issued by the Finance Ministry said that the agency initiated a review of the Paytm Payments Bank Ltd on receipt of specific information from law enforcement agencies in respect of few entities and their network of businesses engaged in a number of illegal acts, including organising and facilitating online gambling. Further, “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 Ltd,” the statement said.

Based on the intelligence reports and upon scrutiny of the documents on record, the agency issued compliance Show Cause Notice to the bank for its violations of various sections of PML rules. The notice also mentioned about violation of rules related with AML (Anti-Money Laundering)/ CFT (Combating Financing of Terrorism) / KYC (Know Your Client( safeguards in respect of Payout services and in respect of beneficiary accounts.

After considering the written and oral submissions the agency found that the charges against Paytm Payment Bank were substantiated. Accordingly, order dated March 1 mentioned, “it was found to be appropriate to impose a penalty of ₹5.49 crore.”

Commenting on the latest development, 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 FIU-Ind.”

• Also read: Paytm Payments Bank: Continued regulatory lapses drew stringent RBI action 

On January 31, the RBI directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. Later the date has been extended to March 15. There have been allegations of violation of various norms including KYC.

FIU-India is central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. It also works towards coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and financing of terrorism.