Paytm Fined Over Money Laundering Allegations

Published about 2 months ago

Indian financial services company Paytm’s banking sector, Paytm Payments Bank, has been slapped with a 55 million rupee ($663,000) fine by a local regulator. The fine was issued following allegations of money laundering activities linked to the banking unit.

Illegal Activities Through Paytm Payments Bank

According to the Financial Intelligence Unit of India, an investigation into Paytm Payments Bank revealed that businesses engaged in illegal activities, such as online gambling, were able to funnel funds through accounts associated with the unit.

Paytm’s Response to the Fine

In response, Paytm Payments Bank claims that the issued fine relates to problems within a business segment that ceased operations two years ago. The company asserts that it has since improved its monitoring systems to prevent such issues.

Increased Scrutiny from the Reserve Bank of India

The fine arrives at a time when Paytm Payments Bank is already under increased observation from the Reserve Bank of India (RBI). The RBI has imposed severe restrictions on the unit due to compliance concerns, leading to a significant fall in the share price of Paytm’s parent company.

To regain the confidence of the central bank and the market, Paytm has commenced the process of terminating various inter-company agreements with the banking unit.