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Delhi High Court Stays ₹96 lakh FIU penalty on PayPal

The Delhi High Court on Monday stayed a penalty issued by the Finance Ministry's Financial Intelligence Unit (FIU) against PayPal Payments Private Limited, the global payments giant's Indian arm, according to LawStreet India. In December 2020, the FIU imposed a ₹96 lakh penalty against PayPal India over non-compliance with norms laid out in the Prevention of Money Laundering Act, 2002 (PMLA). PayPal filed a case with the Delhi High Court challenging the FIU penalty earlier this year. While the court has stayed the penalty, subject to PayPal providing a bank guarantee, it has asked the Reserve Bank of India and the Ministry of Finance to clarify its stance on companies like PayPal's reporting to the FIU. The bone of contention in this case is that PayPal failed to register itself with the FIU for several years. While PayPal says that it is a payments intermediary and not a payments system operator, the FIU says that the PMLA does not "distinguish between ‘payment systems’ and ‘payment services’, and has similar definitions for ‘payments systems’ and ‘payments operators’ as under RBI regulations." Therefore, PayPal is not just a payment intermediary but also operates a payment system, the FIU said. "PayPal wilfully violated law" In its order, the FIU said that “there is ample evidence of the wilful violation of the law and, therefore, PayPal cannot be let off with a penalty that should normally be imposed for minor violations.” It directed the company to pay the fine with 45 days and register…

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