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 Rs.96 lakh penalty against PayPal India over non-compliance with norms laid out in the Prevention of Money Laundering Act, 2002 (PMLA).
The Petitioner, PayPal challenged the impugned order passed by the Director, Financial Intelligence Unit-India, Ministry of Finance, Government of India. By the impugned order, the Petitioner has been held to be a “reporting entity” and a “payment system operator”, under Section 2(1)(wa) and Section 2(1)(rc) of the Prevention of Money Laundering Act, 2002.
The impugned order, thereafter, directed the Petitioner to register itself as a “reporting entity” with the Financial Intelligence Unit-India as well as to appoint a Principal Officer and communicate the name, designation and address thereof, within a period of 15 days of the receipt of the said order.
Advocate Rohatgi on behalf of the Petitioner submitted that the Petitioner is only a facilitator platform which conducts two types of transactions. The first type of transactions are transactions in foreign exchange, which are merely facilitated between registered reporting entities. The second type of transactions are domestic transactions in Rupees.
It is submitted by Mr. Rohatgi, ld. Senior counsel that each and every foreign exchange transaction is reported by the concerned reporting entity and the Petitioner is merely providing a facilitator platform and charging a nominal fee for each of the transactions. No foreign exchange is actually collected or paid by the Petitioner platform.
He categorically submitted and assured the Court that in the transactions facilitated by the Petitioner, no actual money is received or disbursed by the Petitioner- except for the payment of the nominal facilitator fee.
The Single Judge bench of Justice Prathiba M. Singh directed the petitioner to maintain records of all transactions under Section 12(1)(a) of the PML Act, in electronic form on a secure server, located in India, for the same to be retrieved, if required, subject to further orders in this writ petition.
The court further directed the Petitioner to furnish a bank guarantee, to the satisfaction of the Registrar General of this Court, for a sum of Rs.96 lakhs. The said bank guarantee shall be deposited within two weeks.
The court directed the Managing Director of the Petitioner Company to furnish an undertaking to the Court to the effect that it would abide by any orders that may be passed in this petition, including furnishing of data (irrespective of where the servers are located), as may be required by a reporting entity under Section 12 of the PML Act, if the Petitioner is unsuccessful in this petition. The said affidavit of undertaking be filed within two weeks by the Petitioner.
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