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ARTICLE · 23 AUGUST 2023

Decoding The PayPal Verdict

Ikigai Law
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In this article, we delve into the Delhi High Court's verdict on PayPal Payments Private Limited v. Financial Intelligence Unit – India, analysing the complexities surrounding the definition...

IndiaTechnology
Ikigai Law
Ikigai Law
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In this article, we delve into the Delhi High Court's verdict on PayPal Payments Private Limited v. Financial Intelligence Unit – India, analysing the complexities surrounding the definition of 'reporting entities' under the Prevention of Money Laundering Act (PMLA) and its implications for fintechs.

The Delhi High Court's recent judgement in PayPal Payments Private Limited (PayPal) v. Financial Intelligence Unit – India (FIU) has opened up Pandora's box. At its heart? The expansive reading of 'reporting entities' under the Prevention of Money Laundering Act (PMLA), which may rain on the parade of many fintechs.

The Background

The FIU had claimed PayPal was a 'Payment Service Operator' (PSO), an entity that enables payments between remitters and beneficiaries, including clearing, payment or settlement. By extension, PayPal was instructed to register as a 'reporting entity' under the PMLA. Reporting entities are usually financial institutions (including PSOs),

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