ED Not Conducting Any Probe Regarding Money Laundering After RBI Action, Says Paytm

Paytm's parent company, One97 Communications Ltd (OCL), denied any reports of the Enforcement Directorate initiating an investigation against the company, its associates, or its founder and CEO, Vijay Shekhar Sharma. The firm issued a clarification via a regulatory filing on sunday and refuted recent media reports claiming a probe into the firm regarding money laundering concerns after the RBI’s latest action against the company.

The fintech firm further said that it always cooperated with the authorities completely in the past, when users or merchants on its platforms were subjected to inquiries or probes. “We would like to set the record straight and deny any involvement in anti-money laundering activities. We continue to abide by indian laws and take regulatory orders with utmost seriousness,” the statement read, reported business Standard. 

Further, the company has also raised concerns about the market speculation regarding what made the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW">reserve bank of india (RBI) take disciplinary action against the banking business of the entity, namely, the paytm Payments Bank.  It labeled the action taken by the RBI an ‘ongoing supervisory engagement and compliance process’. 

The company urged the stakeholders to not depend on any unofficial sources and rather refer to the official press statement released by the banking regulator on january 31, 2024. 

Notably, the central bank said last wednesday that it is barring the paytm Payments bank from accepting any further deposits of cash transactions or top-ups in customer accounts, prepaid instruments, FASTags, wallets, National Common Mobility Card (NCMC), etc, after february 29, 2024. It, however, didn’t restrict the bank from crediting any interest, cashback, or refunds. The RBI said that while customers will be allowed to use their remaining balance in the paytm wallet after the deadline, they will not be permitted to add any more amount to it after the end of February.

The regulator instructed the firm’s banking wing to stop accepting new customers, earlier in march 2022, citing alleged know-your-customer (KYC) violations. 

According to media reports, issues flagged by the regulator include not disclosing payments to promoters, false compliance submissions, irregularities in the KYC process, and an overall lack of transparency and due diligence maintained by the fintech firm. The regulator found concerns in the KYC process which posed a threat to the customers. These included the use of a single permanent account number (PAN) to authenticate several accounts, conducting transactions well beyond the KYC limit, having an abnormally large number of dormant accounts, and lack of transaction monitoring, among others.