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HomeCURRENT AFFAIRSBUSINESSIs PayTM Involved in Money Laundering? How Digital Payment Pioneer Came Under...

Is PayTM Involved in Money Laundering? How Digital Payment Pioneer Came Under RBI Scanner

Discover how the situation is unravelling as the Reserve Bank of India (RBI) closely monitors Paytm Payments Bank.

PayTM: One of the main causes of the Reserve Bank of India‘s strict restrictions on the company was the hundreds of accounts opened on Paytm Payments Bank without the required identity, according to persons familiar with the situation. Due to transactions worth crores of rupees being made on the platform by these accounts with insufficient Know-Your-Customer (KYC), there were worries about possible money laundering.

Compliance Inaccuracy Unveiled

It was discovered that over one thousand individuals had connected their accounts to the same Permanent Account Number (PAN). Both the RBI and the auditors discovered during the verification process that the compliance that the bank had submitted was inaccurate.

According to sources, the RBI is worried that some of the accounts may have been used for money laundering. The RBI has notified the Prime Minister’s Office and the Ministry of Home Affairs of its findings in addition to the Enforcement Directorate.

Illicit Conduct Alert

Revenue Secretary Sanjay Malhotra told Reuters that if any proof of illicit conduct is discovered, the Enforcement Directorate will look into Paytm Payments Bank. Concerns from regulators were heightened by reports of significant transactions inside the group and related parties not being disclosed.

A closer look by the central bank also revealed weaknesses in the governance guidelines, mainly in the connection between Paytm Payments Bank and One97 Communications Ltd., the bank’s parent firm.

Data Privacy Crisis

The RBI decided to stop accepting payments through Paytm Payments Bank due to concerns about data privacy generated by transactions processed through the Paytm parent app. Although deposits made by users into wallets, savings accounts, FASTags, and NCMC accounts are unaffected right away, the company’s operations will be dependent on other banks till February 29.

Paytm Faces Major Blow as Market Reacts to RBI’s Move

Paytm’s shares fell precipitously after the RBI’s announcement, falling 36% in two days and losing $2 billion in market value. In an attempt to reassure stakeholders amidst the current turmoil, Paytm founder Vijay Shekhar Sharma referred to the regulatory actions as a “speed bump” during a conference call with analysts.

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