Paytm Payments Bank of India hit with $662,000 fine amid allegations of money laundering
File photo of the Paytm logo.
India's Financial Intelligence Unit (FIU) levied a fine of 54.9 million rupees ($662,565 approx) on Paytm Payments Bank, an affiliate of fintech giant Paytm, for alleged involvement in money laundering. This action followed a review prompted by law enforcement's information regarding alleged illegal activities such as online gambling facilitation.
"The money generated from these illegal operations proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank," the ministry said.
The ministry announced that after reviewing extensive documentation, it determined the validity of the allegations against Paytm Payments Bank.
A spokesperson for Paytm Payments Bank clarified that the penalty is over issues from a business that ceased operations two years ago.
In response to the findings, Paytm Payments Bank said it had bolstered its surveillance systems and reporting protocols to comply with requirements set by the FIU.
Also watch |Paytm overhauls banking board, CEO Vijay Shekhar Sharma resigns from Payments Bank Board
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Regulatory scrutiny and RBI directive
Earlier, the Reserve Bank of India (RBI) had instructed Paytm Payments Bank to cease operations by March 15, citing ongoing regulatory non-compliance issues and supervisory concerns.
Paytm acknowledged receiving inquiries from regulatory bodies, including the Enforcement Directorate, and pledged cooperation in providing necessary information and explanations.
While it remains unclear if the finance ministry's actions are linked to the RBI's directive, Paytm has taken steps to address compliance issues, including severing some connections with its payments bank division.
Paytm Payments Bank is majority-owned by CEO Vijay Shekhar Sharma, with Paytm holding the remaining stake. Sharma recently resigned as non-executive chairman and board member of the payments bank as part of a broader organisational restructuring effort.
(With inputs from agencies)