The FIU has imposed a Rs 96 Lakh penalty on Pay Pal, the giant American online payment gateway, for breaching the anti-money laundering law and covering the suspected transactions, and aiding India’s fragmented financial system.
PayPal has conducted operations in India since November 2017 and has agreed to comply with the dues. PayPal is reviewing the allegations of defeating the doctrines of public interest and the PMLA Prevention of Money Laundering Act that safeguards the country from black money, terrorist financing, and economic crimes.
The Financial Intelligence Unit (FIU) termed the breaches as deliberate in the twenty-seven paged order. It issued the order on 17 December, holding the company accountable for three major offenses. The prime offense being not registering itself as a reporting entity with the federal agency as required by PMLA.
Pankaj Kumar Mishra, the FIU Director, said that as per the PMLA section 13(2)(d), 2002, PayPal Payments Private Limited will have to pay a fine of Rs. 96 Lakh, which will equal the violation amount committed. Since there was plenty of evidence of the deliberately committed offense, they could not let off PayPal with a small penalty for minor violations.
PayPal Payments Private Limited will have to pay the fine within 45 days and register with the Financial Intelligence Unit for reporting. Further, they have to appoint a director and principal officer for communication in two weeks hence the order. PayPal Payments Private Limited is entitled to appeal to the Appellate Tribunal of the PMLA against the order within a month and a half. The PayPal representative said that they would oblige as per regulatory compliance. It is the first instance that the Union finance ministry’s agency FIU has taken punitive action against online payment system functioning in India. It had so far taken action against the private banks, public banks, and cooperative banks for money-laundering.
The legal fight between FIU and the payment gateway system, PayPal, began in March of 2018. FIU had asked PayPal to register as a reporting entity. It was required for reporting transactions and suspicious cross wire ones to identify the beneficiaries. FIU then shared the reports with other investigation agencies for action. Since PayPal refused the directive and FIU under section 13, filed a show-cause notice last September.
