ED to probe Paytm Payment Bank if money laundering found

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The Directorate of Enforcement (ED) will probe Paytm Payment Bank if there are fresh money laundering charges by the Reserve Bank of India (RBI), a senior Finance Ministry official confirmed on Saturday.

businesslineasked: “Is it correct that ED will probe Paytm Payment Bank if there are fresh charges of money laundering by RBI?” In response to this, the official said, “Yes.“

The highly-placed official’s remarks are significant in the context of government agencies raising security concerns related to fund flows with links to China. Also, RBI has uncovered data breaches and found violations of the PMLA. Some reports also suggested that it might lose its payment bank license.

Earlier this week, banking regulator RBI said that Paytm Payment Bank will not be allowed to take further deposits, credit transactions or top-ups in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024. However, interest, cash-backs, or refunds may be credited anytime. It also said that the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated as soon as February 29, 2024.

Further, settlement of all pipeline transactions and nodal accounts (in respect to all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.

“The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action,” RBI said while giving reasons for its action. However, it clarified that withdrawal or utilisation of balances by its customers from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., are to be permitted without any restrictions, up to their available balance.

In March 2022, RBI directed Paytm Payment Bank to stop, with immediate effect, the onboarding of new customers. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of the new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by the RBI after reviewing the report of the IT auditors. This action is based on certain material supervisory concerns observed in the bank.” It said.

Meanwhile, on Friday, Paytm founder Vijay Shekhar Sharma said there would be no impact on the paytm app, and it would continue to provide services as usual. ”Your favourite app is working, will keep working beyond February 29 as usual. I, with every paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services – with Paytm Karo as the biggest champion of it,” Sharma said.