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Numerous Paytm Bank Accounts Suspected of Money Laundering

Along with banning Paytm Payments Bank from all forms of banking services, the Reserve Bank of India (RBI) has passed information about thousands of suspicious bank accounts to the country’s financial crime-fighting agency.

Numerous Paytm Bank Accounts Suspected of Money Laundering

India’s central bank, RBI, discovered that hundreds of thousands of accounts were created at Paytm Payments Bank without proper identification. As three anonymous sources familiar with the matter revealed to Reuters, the regulator has handed this information over to the Enforcement Directorate – a local financial crime-fighting agency.

Two of the sources claimed that multiple accounts at Paytm Payments Bank were linked to the same identification proof. Transactions in those accounts reportedly account for millions of rupees. One source also noted an “unusually” high number of dormant accounts that have seen no activity for a long period of time.

The RBI has concerns that some of the improperly created accounts could have been used for money laundering. The RBI has also informed the Ministry of Home Affairs and the Prime Minister’s office about its findings. 

The report sheds some light on the reasons the Reserve Bank of India has earlier banned Paytm Payments Bank from all forms of banking services, including bank transfers and accepting deposits.

Following a thorough external audit, India’s central bank RBI has ordered Paytm Payments Bank, a division of one of India’s largest payment firms Paytm, to stop accepting deposits or top-ups in customer accounts, prepaid instruments, wallets, NCMC cards, and FASTags after February 29, 2024.

The settlement of all pipeline transactions and nodal accounts of One97 Communications Ltd, which holds a 49% stake in the banking unit and Paytm Payments Services Ltd must be completed before March 15, 2024.

A Paytm Payments Bank spokesperson, however, claimed that “One 97 Communications Ltd. and Paytm Payments Bank have never been probed by the Enforcement Directorate.”

The bank’s representative admitted that some merchants using Paytm financial platforms have been the subject of investigations. At the same time, the spokesperson called for the media to refrain from speculations and assured cooperation with the regulators on the matter.

The Enforcement Directorate will probe Paytm Payments Bank if any evidence of illegal activity is found, Revenue Secretary Sanjay Malhotra told Reuters.

Since RBI initial announcement, Paytm has lost $2 billion in market value, as its shares went down over 35%.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.