ED initiates money laundering probe against Paytm Payments Bank
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New Delhi: The Enforcement Directorate has commenced a money laundering investigation against Paytm Payments Bank Ltd.
The company is also under scrutiny for alleged violations of foreign exchange rules, a claim Paytm has disputed as "factually incorrect."
The investigation adds to the challenges faced by Paytm CEO Vijay Shekhar Sharma after the Reserve Bank of India (RBI) recently barred Paytm Payments Bank Ltd. (PBBL) from credit transactions across most services due to "persistent non-compliance."
The RBI's action resulted in the closure of several operations, including its digital wallet. PBBL's nodal accounts and those of its parent company, One97 Communications Ltd., were terminated. Despite these restrictions, customers can continue using their account balances without restrictions up to the available limit.
The RBI cited concerns about "persistent non-compliances and continued material supervisory concerns" in the bank after an audit revealed issues, including hundreds of accounts created without proper identification. Over 1,000 users were found to have linked the same Permanent Account Number (PAN) to their accounts, raising fears of potential money laundering.
Since January 31, Paytm's stock has experienced a significant decline, losing over 60% of its value.
Paytm CEO Vijay Shekhar Sharma has sought relief from Finance Minister Nirmala Sitharaman but has not been successful. RBI Governor Shaktikanta Das emphasised that the regulatory action was taken in the "best interest of systemic stability" and customer protection.
Despite the challenges, Paytm has announced the formation of an advisory committee on compliance and regulatory matters, led by M Damodaran, former Chairman of the Securities and Exchange Board. PBBL assures customers that their money is safe, but it confirms that they will not be able to deposit money into accounts or wallets after February 29, while the app will continue to operate normally.