PayPal fined INR 96 Lakh by India’s Financial Regulator for alleged money laundering violation

Online payments major PayPal has been hit with a INR 96 Lakh fine by the finance ministry’s Financial Intelligence Unit (FIU) for allegedly violating India’s anti-money laundering law.

The US-based company has also been accused of “concealing” suspect financial transactions and abetting “disintegration” of India’s financial system, this is the first time a digital financial service provider has been charged by the FIU.

According to the FIU order, “The business model offered by PayPal clearly indicated that it not only acts as an intermediary but actively undertakes money transfer operations…PayPal undertakes to settle an online transaction by moving money from the customer’s account (issuing bank) to the merchant account, which ultimately transmits funds to the merchant’s bank account (acquiring bank) when the transaction is finalised,”

The FIU also claimed that they have ample evidence of a willful violation on PayPal’s part, which is why the penalty amount is higher than what is normally imposed for minor violations.

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