Paytm Payments Bank Fined ₹5.49 Crore for Failing to Report Suspicious Transactions

India's Financial Intelligence Unit (FIU) has imposed a penalty of ₹5.49 crore (approximately $662,565) on Paytm Payments Bank for violations in reporting illegal money routed through its accounts.

Key Points:

  • FIU initiated a review based on information from law enforcement agencies regarding entities involved in illegal activities, including online gambling, using the bank.
  • Paytm Payments Bank failed to report suspicious transactions and conduct proper due diligence on these accounts.
  • The penalty pertains to issues within a business segment discontinued two years ago, and the bank has since improved its monitoring and reporting systems.
  • This comes amidst broader compliance concerns surrounding Paytm, with the Reserve Bank of India previously asking the bank to wind down operations by March 15.

FIU Review and Penalty:

The FIU, a government agency responsible for combating financial crimes, reviewed Paytm Payments Bank after receiving information from law enforcement agencies. This information indicated that certain entities were engaged in illegal activities, such as online gambling, and using the bank to channel their proceeds.

The Indian Finance Ministry alleges that funds obtained through illegal activities were funneled and channeled through bank accounts held by these entities at Paytm Payments Bank. The FIU determined that the bank failed to fulfill its reporting obligations and conduct proper due diligence on these accounts, leading to the ₹5.49 crore penalty.

Paytm Payments Bank's Response:

A spokesperson for Paytm Payments Bank acknowledged the penalty but clarified that it pertains to issues within a business segment discontinued two years ago. The spokesperson further stated that the bank has since enhanced its monitoring systems and reporting mechanisms to comply with FIU regulations.

Wider Compliance Concerns for Paytm:

This incident is not an isolated case for Paytm. The Reserve Bank of India (RBI) previously directed Paytm Payments Bank to cease operations by March 15, citing persistent compliance issues and supervisory concerns. Additionally, Paytm has received inquiries and notices from various authorities, including the Enforcement Directorate, another financial crime fighting agency.

In response to these challenges, Paytm has taken steps to address compliance concerns. One such measure involves severing certain ties with its payments bank unit. Paytm CEO Vijay Shekhar Sharma also stepped down from his non-executive chairman and board member positions at the payments bank as part of a broader restructuring effort.


The FIU penalty on Paytm Payments Bank highlights the importance of adhering to financial regulations and reporting suspicious activity. The incident also underscores the ongoing challenges faced by Paytm as it navigates compliance issues and works to regain the trust of regulatory authorities.