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PayTM fined millions due to criminal activity

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The latest on India’s PayTM from the government crackdown to the Enforcement Directorate’s in-depth investigation.


While PayTM has significantly contributed to digital finance in India, it now confronts an uncertain future.

In February 2024, the Reserve Bank of India (RBI) requested PayTM payments back to stop its operations due to compliance issues and supervisory concerns. And now, after review by the FIU, it’s been slapped with a 54.9 million rupees fine.

PayTM in hot water

PayTM is a digital wallet that enables you to receive deposits, store cash, and make payments using a QR code or a mobile number. You can also transfer money to and from your personal bank account.

While it’s been a pivotal point for digital payments in India, it’s in hot water with the authorities. With the latest regulatory crackdown, the payment provider PayTM has been asked to stop accepting deposits into PayTM bank accounts and wallets.

This is due to its persistent non-compliance with the rules. According to the Reserve Bank of India (RBI), PayTM is actively involved in financial crimes, which include falsifying customer information and money laundering.

Since its launch in 2010, the company has been in hot water frequently, and according to financial expert Srinath Sridharan, it has lost the regulator’s trust.

Fines for PayTM Payments Bank

Earlier this month, India’s Financial Intelligence Unit (FIU) slapped PayTM Payments Bank with a 54.9 million rupee penalty due to its violence, which included illegal money routing through its account.

PayTM Payments Bank was under FIU review after information regarding illegal acts came to light, including organising and facilitating online gambling events and routing funds. According to the Ministry, the funds from these illegal operations were routed and channelled through bank accounts maintained by the units of Paytm Payments Bank.

According to the FIU, plenty of material on record substantiates the charges against PayTM. However, according to a PayTM spokesperson, the penalty relates to issues with its business segment, which was discontinued two years ago. Since then, the company has enhanced its monitoring systems and reporting mechanisms to the FIU.

PayTM has been requested to provide information and explanations by the authorities and the financial crime-fighting agency, Enforcement Directorate.

The division has also cut some ties with its payments bank unit to address many of the compliance concerns shared last month.

PayTM CEO Vijay Shekhar Sharma, who owns a 51% stake in PayTM Payments Bank, has stepped down as the non-executive chairman and board member of the payments bank unit. The decision was made in an attempt to bring change and comply with the regulations.

Evidence and future plans

According to the FIU’s investigation, the charges against PayTM were based on substantial evidence. A spokesperson at the bank acknowledged the violations and said improvements have been made in monitoring and reporting mechanisms.

Aside from the FIU, India’s central government’s money laundering watchdog, the Enforcement Directorate, has investigated the company since 2021. The investigation focuses on alleged money laundering, illegal gambling, and other cryptocurrency-related irregularities.

Furthermore, the Enforcement Directorate has forced around US$15 million in bank deposits after it raided Mumbai, Kochi, and Chennai, which brought to light evidence of Chinese-controlled gambling operations and illegal loan apps.

With the evidence coming to light, the Enforcement Directorate has intensified its investigations, focusing on online gambling operations in India, including payments, local website operations, and foreign operators.

PayTM is on the receiving end of a lot of criticism and their wallet business. The blow has affected small business owners who use the app to provide more convenient payment methods to customers. PayTM took the hit as investors pulled out billions of rupees after share values went down drastically.

Published: March 13, 2024

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Article by Polly

CasinoWow Contributor

Hey guys, my name is Polina but my friends and colleagues call me Polly. I am truly passionate about online casino gaming and exploring the different online gambling experiences. I'm really into diving deep into topics and researching all the details. My aim is to gather the best information and write interesting articles for all the readers at CasinoWow.

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