American online payment gateway giant PayPal has been imposed a Rs 96 lakh penalty by the FIU for alleged contravention of the anti-money laundering law and accused of “concealing” suspect financial transactions and abetting “disintegration” of India’s financial system. PayPal, which began India operations in November 2017, said it was fully committed to follow due processes and is “carefully reviewing the matter”.
The company has also been charged with “defeating and frustrating” the tenets of public interest and the provisions of the Prevention of Money Laundering Act (PMLA), which aims to keep the country’s financial system safe from economic crimes, terrorist financing and black money transactions. Calling the contraventions as “deliberate and wilful”, the Financial Intelligence Unit (FIU) in a scathing 27-page order issued on December 17 held the company guilty on three broad counts, the fundamental being its failure to register itself as a “reporting entity” with the federal agency as mandated under the PMLA.
“…I, in exercise of powers conferred upon me under section 13(2)(d) of the PMLA, 2002 impose a total fine of Rs 96 lakh only on PayPal Payments Private Limited which will be commensurate with the violations committed by it,” the order issued by FIU Director Pankaj Kumar Mishra said. It said that “there is ample evidence of the willful violation of the law and, therefore, PayPal cannot be let off with a penalty that should normally be imposed for minor violations”.
The order directs the company to pay the fine within 45 days and also register itself as a reporting entity with the FIU, appoint a principal officer and director for communication within a fortnight of the receipt of the order. An appeal against the order can also be made before the Appellate Tribunal of the PMLA within 1.5 months.
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