New Delhi, Aug 24 : Online payment gateway PayPal has taken its case to the Delhi High Court after a single-judge order said that it was a Payment System Operator under the Prevention of Money Laundering Act (PMLA), subjecting it to "reporting obligations". Represented by senior counsel, PayPal argued before a bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula that the single judge's order was wrong. Senior Advocate Mukul Rohatgi, speaking for the company, contended that the single judge's decision could not be sustained in light of a recent ruling by the high court on the payment system operator issue. The single judge had, on July 24, set aside a fine of Rs 96 lakh imposed by India's Financial Intelligence Unit (FIU) on PayPal. The fine was related to alleged non-compliance with reporting obligations concerning money laundering. However, the judgement also held that PayPal fell within the classification of a "payment system operator" under the PMLA and must comply with associated reporting obligations. This order stemmed from a petition by PayPal contesting the penalty imposed by the FIU. The FIU had issued a directive to PayPal on December 17, 2020, requiring it to pay the fine within 45 days, register as a reporting entity, appoint a principal officer, and a director for communication ' all due to its status as a "payment system operator". This directive was issued under the law that mandates reporting entities to inform authorities of foreign exchange financial transactions within their system. The single judge had underscored that the PMLA not only functions as a penal statute but also serves the purpose of discovering and preventing fraudulent and suspicious transactions. The FIU-India, in its December 2020 order, had accused PayPal of violating the PMLA, hiding suspect financial transactions, and contributing to the weakening of India's financial system. The legal conflict had its roots in March 2018 when the FIU asked PayPal to register as a reporting entity, report suspicious transactions and cross-border wire transfers, and identify beneficiaries. PayPal countered this by citing Reserve Bank of India guidelines, stating that it operated as an Online Payment Gateway Service Provider (OPGSP) and not a payment system operator, thus exempt from reporting entity requirements under the PMLA. However, the FIU rejected PayPal's stance, asserting that the company was indeed involved in fund handling in India, qualifying it as a "financial institution" and, therefore, subject to reporting entity status under the PMLA. The FIU order also said that PayPal's parent company in the US reports suspicious transactions to relevant agencies abroad. /IANS