Delhi High Court stays Financial Intelligence Unit order imposing Rs 96 lakh penalty on PayPal

On Tuesday, the Delhi High Court stayed an order by the Financial Intelligence Unit imposing a penalty of Rs 96 lakh on the PayPal payment service.

The stay is subject to PayPal depositing with the High Court a bank guarantee of the penalty amount and keeping records of all its transactions.

In PayPal’s challenge to the penalty levied on it, the order was passed by the Single Judge Bench of Justice Prathiba M Singh.

While issuing a notice in the case, the Court, under the aegis of the Union Ministry of Finance, demanded a reply from the Financial Intelligence Unit, which is India’s central agency responsible for processing information relating to suspicious financial transactions.

The penalty was levied under the Prevention of Money Laundering Act (PMLA), 2002, on PayPal for not registering itself as a “reporting entity.”

In its plea, PayPal claimed that PMLA provisions were wrongly interpreted by the Financial Intelligence Unit against all settled standards of legislative interpretation.

The company has argued that it represents its customers as a payment broker and Online Payment Gateway Service Provider and does not offer clearing, payment, money transfer, or settlement services.

PayPal also argued that the order challenged was in breach of the standards of natural justice, since there was never an opportunity to counter those findings made against it.

The matter is to be heard on February 26.

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