The FIU began investigating Paytm Payments Bank after receiving information from law enforcement agencies about certain companies involved in illegal activities such as organizing and facilitating online gambling and depositing earnings through banks.
The ministry said in a statement: Funds from these illegal activities, i.e. H. Proceeds of crime were transferred to the payment bank Paytm through the bank accounts of these companies.
According to the FIU order, the payment bank failed to report suspicious transactions and failed to check these accounts.
The ministry added that the allegations against Paytm Payments Bank were substantiated based on the “extensive” material in the file.
A spokesman for payments bank Paytm said the penalty was related to an issue in its business unit, which was discontinued two years ago. Since then, the company has strengthened its monitoring systems and reporting mechanisms to the FIU, the spokesman added.
Earlier in February, the Reserve Bank of India (RBI) had asked payments bank Paytm to suspend operations by March 15, citing ongoing compliance issues and regulatory concerns.
Paytm had earlier said that it has received and is providing notices seeking information and clarification from authorities, including the Financial Crimes Enforcement Directorate.
Meanwhile, Paytm has cut some ties with its payments banking unit to address regulatory compliance concerns that sent its share price plummeting last month.
Paytm CEO Vijay Shekhar Sharma holds 51% stake in Paytm Payments Bank and Paytm owns the rest.
Earlier this week, Sharma stepped down as non-executive chairman and head of payments banking as part of a major restructuring.