PayPal Challenges Delhi High Court's Ruling on 'Payment System Operator' Status under PMLA
PayPal challenges its 'payment system operator' classification under PMLA by Delhi High Court, disputing 'reporting obligations'. Get insights into the legal battle and its implications.
Online payment giant PayPal has taken legal action against a Delhi High Court decision that classified it as a 'payment system operator' under the Prevention of Money Laundering Act (PMLA), thereby subjecting it to 'reporting obligations' outlined in the law. Represented by senior advocate Mukul Rohtagi, PayPal argues that the initial order, issued by a single judge of the high court, was erroneous.
The legal dispute stems from a penalty of INR 96 lakh that the Financial Intelligence Unit (FIU) imposed on PayPal in December 2020. The FIU alleged that PayPal had violated the PMLA by not adhering to the 'reporting obligations' related to suspicious financial transactions. However, the Delhi High Court overturned this penalty on July 24, a ruling now contested by PayPal.
In response to the ruling, PayPal contends that it functions as an Online Payment Gateway Service Provider (OPGSP) or a payment intermediary in India, rather than a payment system operator as per the PMLA's definition. As the case unfolds, a two-judge bench comprising Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula heard the appeal made by PayPal. Rohtagi emphasized that the single judge's decision contradicts a recent high court verdict on the payment system operator classification.
The bench has scheduled further hearings for September to delve deeper into this legal tussle.
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