The Delhi High Court has sought response of the Financial Intelligence Unit (FIU) India on American online payment gateway PayPal's plea challenging the Rs 96 lakh penalty imposed on it for alleged violation of anti-money laundering law. The high court also stayed the FIU's December 17, 2020 order subject to PayPal maintaining records of all its transactions in a secure server and depositing within two weeks in the high court a bank guarantee of Rs 96 lakh. Justice Prathiba M Singh issued notice to the FIU and sought its stand on PayPal's plea by February 26.
The high court also directed the Managing Director of PayPal India to give an undertaking that in case the company does not succeed in the matter, it will furnish all the data as required to be provided by a reporting entity. The high court also made the Reserve Bank of India (RBI) a party in the matter as it was governing the functioning of PayPal. It directed the RBI and the Ministry of Finance to constitute a committee of its representatives to take a policy decision at the highest level on whether a company like PayPal, which facilitates transactions, can be considered as a payment system operator and also as a reporting entity under the Prevention of Money Laundering Act (PMLA).
The high court said a "clear policy decision" has to be taken at the highest level as this is the first case of its kind and any decision taken now would affect any such similar business which might be set up in future. "Their becoming a reporting entity is of major consequence," the judge said.
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