India's Monetary Intelligence Unit (FIU) on Friday imposed a penalty of Rs. 5,49,00,000 ($662,565) on Paytm's banking arm, Paytm Funds Financial institution, for violations in reporting unlawful cash routed by way of its accounts, the nation's finance ministry stated.
The FIU has initiated a evaluate of Paytm Funds Financial institution following data from regulation enforcement businesses about some entities engaged in unlawful acts, together with organizing and facilitating on-line playing, and routing of the proceeds by way of the financial institution.
“The cash generated from these unlawful operations, i.e. the proceeds of crime, had been routed and channeled by way of the financial institution accounts maintained by these entities with the Paytm Funds Financial institution,” the ministry stated in an announcement.
The fee financial institution didn’t report suspicious transactions and do due diligence on these accounts, the FIU order stated.
Based mostly on the “voluminous” materials out there on the data, it discovered that the allegations in opposition to Paytm Funds Financial institution had been substantiated, the ministry added.
The penalty pertains to issues in a enterprise phase that was discontinued two years in the past, a Paytm Funds Financial institution spokesperson stated. The corporate has since improved its monitoring techniques and reporting mechanisms to the FIU, the spokesperson added.
Earlier in February, the Reserve Financial institution of India (RBI) had requested Paytm Funds Financial institution to wind down operations from March 15 resulting from persistent compliance points and supervisory considerations.
Paytm had earlier stated that it has obtained notices for data and explanations from authorities, together with the Monetary Crimes Enforcement Directorate, and supplied them with the identical.
In the meantime, Paytm has minimize some ties with its funds banking unit in a bid to deal with compliance points that triggered its shares to break down final month.
Paytm CEO Vijay Shekhar Sharma owns a 51 % stake in Paytm Funds Financial institution, whereas Paytm owns the remaining.
Earlier this week, Sharma stepped down as non-executive chairman and board member of the funds banking unit, as a part of a significant overhaul.
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