India's Financial Intelligence Unit has imposed a fine of Rs 5.49 crore penalty on Paytm Payments Bank for money laundering.
Proceeds of crime were allegedly being routed through bank accounts maintained with the lender by entities engaged in illegal activities. The finance ministry arm initiated a review of the Paytm Payments Bank 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.
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).'
On January 31, the Reserve Bank of India had asked PPBL to stop most banking services to be stopped by February 29, which was later extended to March 15.
The development comes after Paytm said it is cutting back business ties with its banking affiliate, seeking to appease regulators who are pursuing a cleaner distinction between the two.
The listed company said that owners of Paytm Payments Bank Ltd. agreed to simplify the shareholders agreement to support its governance. Both Paytm and Paytm Payments Bank are part of billionaire Vijay Shekhar Sharma’s fintech empire, but the bank isn’t controlled by the publicly traded mobile wallet pioneer.
The moves are part of Sharma’s effort to create an arm’s length between Paytm and its tightly regulated affiliate.