India’s Financial Intelligence Unit (FIU) on Friday imposed a penalty of Rs 5.49 crore on Paytm Payments Bank, for alleged money laundering, the country’s finance ministry said in a statement.

The statement said that the FIU initiated a review of Paytm Payments Bank on the receipt of specific information from law enforcement agencies in respect of a few entities engaged in illegal acts, including organising and facilitating online gambling.

“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.

Based on the voluminous material available on record, it found that the charges against Paytm Payments Bank were substantiated, the ministry added.

The penalty pertains to issues within a business segment discontinued two years ago, a spokesperson for Paytm Payments Bank said.

The company has since enhanced its monitoring systems and reporting mechanisms to the FIU, the spokesperson said in a statement.

Earlier in February, the Reserve Bank of India (RBI) had asked Paytm Payments Bank to wind down operations by March 15 due to persistent compliance issues and supervisory concerns.

Paytm had earlier said that it received notices for information and explanations from the authorities, including the financial crime-fighting agency Enforcement Directorate, and was providing them with the same.

Snap links

The FIU action came on a day the board of Paytm’s parent, One 97 Communications Ltd,
approved the discontinuation of inter-company pacts with PPBL to reduce dependencies. It is seen as a step by Paytm to allay any concerns about its relationship with the payment bank.

In a regulatory filing on Friday, OCL said the company and PPBL have introduced additional measures to strengthen their approach towards the independent operations of PPBL.

“As part of this process to reduce dependencies, Paytm and PPBL have mutually agreed to discontinue various inter-company agreements with Paytm and its group entities,” the communication said.

Also, the shareholders of PPBL have agreed to simplify the shareholders agreement to support PPBL’s governance, independent of its shareholders, it added.

Recently, Paytm founder Vijay Shekhar Sharma resigned as the part-time non-executive chairman of PPBL.

With inputs from Reuters