The Delhi High Court has made the Union Ministry of Finance a party to an appeal filed by online payment platform PayPal challenging an order categorizing it as a Payment System Operator (PSO) under the Prevention of Money Laundering Act (PMLA). A division bench of the High Court noted the importance of the issue and granted four weeks to the Ministry of Finance to file a detailed response.
The court's decision means that PayPal may have to comply with reporting entity obligations under the PMLA, including maintaining transaction records and verifying the identities of clients for ten years. PayPal argued that it is neither a payer nor a recipient of funds but only a payment gateway.
On the other hand, the Financial Intelligence Unit (FIU) argued that PayPal is a PSO and could potentially be used for illegal activities like terror financing. The court expressed concerns about such possibilities and stated that it was being cautious in the case.
The matter is scheduled for further consideration on October 18.
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