FIU, ED seek report from RBI on action taken to bar Paytm's banking unit

The Enforcement Directorate and the Financial Intelligence Unit have asked the RBI to share its report on the recent action taken to bar Paytm Payments Bank Ltd from accepting deposits or top-ups in customer accounts, official sources said on Tuesday.

Federal agencies ED and FIU, tasked with checking violations under the Prevention of Money Laundering Act (PMLA), are already probing matters related to the payment gateway under provisions of the anti-money laundering law.

Following the action of the Reserve Bank of India (RBI), Paytm has said it did no wrong and asserted that its brand owner company One97 Communications, founder and CEO Vijay Shekhar Sharma and Paytm Payments Bank Ltd (PPBL) are not being investigated for money laundering or foreign exchange violations.

The Enforcement Directorate (ED) has asked the RBI to share its latest report so that it can analyse if it needs to initiate a probe against PPBL, a senior official told PTI.

The agency has been probing Paytm and other online payment wallets as part of a money laundering investigation against Chinese-controlled mobile-phone applications that allegedly laundered funds using merchant IDs created on these fintech platforms.

Once the report is studied, the future course of action will be prepared. The agency can initiate a fresh probe or subsume the fresh charges under its ongoing investigation involving Paytm, the sources said.

The Financial Intelligence Unit (FIU) has also sought the report from the RBI to analyse whether Paytm or PPBL followed the required procedures as a "reporting entity" under section 13 of the PMLA.

Under this section of the anti-money laundering law, a financial institution, bank or intermediary has to furnish details to the FIU about maintaining records of all transactions and documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients, the sources said.

The FIU functions under the finance ministry and is tasked to detect money laundering and black money in the country's economic channels.

It is empowered under the PMLA to receive suspicious transaction and cash transaction reports from various "reporting entities", analyse them and disseminate vital information to intelligence and enforcement agencies apart from regulatory authorities.

The FIU's director can also impose a monetary penalty against a "reporting entity" for violating specific PMLA sections. The penalty will not be less than Rs 10,000 but may extend to Rs 1 lakh for each failure.

The RBI on January 31 had directed PPBL to stop accepting deposits or top-ups in customer accounts, wallets, FASTags and other instruments after February 29.

Withdrawal or utilisation of balances by its customers from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards, are to be permitted without any restrictions, up to their available balance.

Paytm Wallet users can continue to carry on transactions till February 29.

However, after February 29, they will be able to use their existing balance till the time it is exhausted, but cannot add any money to their account.

The same rule is applicable to PPBL Accounts, Paytm wallet-linked services like Fastag, and National Common Mobility Cards that are used for travel in the metro and other public transport.