FFUI imposes Rs 9.6 mn penalty on PayPal for violating anti-money laundering processes

The Financial Intelligence Unit (FIU) has imposed a penalty of Rs 9.6 million on US payment gateway giant PayPal for alleged contravention of the anti-money laundering law and accused it of ‘concealing’ suspect financial transactions and abetting ‘disintegration’ of India's financial system.

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.

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 be made before the Appellate Tribunal of the PMLA within 1.5 months.

PayPal, that began its India operations in November 2017 said that it was fully committed to follow due processes and is carefully reviewing the matter.