Delhi HC quashes Rs 96 lakh penalty on PayPal by FIU

The Delhi High Court on Monday set aside a penalty of Rs 96 lakh imposed on American online payment gateway PayPal by the Financial Intelligence Unit-India for alleged non-compliance with the reporting obligations under the law against money laundering.

Justice Yashwant Varma, however, ruled that PayPal was liable to be viewed as a payment system operator under the Prevention of Money Laundering Act (PMLA) and so has to comply with reporting obligations under the law.

In its 174-page order, the court rejected the penalty imposed upon PayPal, saying it was “clearly unjustified” as PayPal was under the bona fide belief that its operations did not fall within the ambit of the PMLA.