RBI Expands Probe Beyond Paytm: More Payments Banks Under Scrutiny for Money Laundering

In the aftermath of the recent crackdown on Paytm Payments Bank by the Reserve Bank of India (RBI), the regulatory spotlight is now widening its reach to include additional payments banks. The RBI is intensifying its scrutiny to ensure compliance with regulatory norms aimed at curbing money laundering, according to a report by The Economic Times.

The Financial Intelligence Unit (FIU) has reportedly uncovered approximately 50,000 bank accounts lacking proper know-your-customer (KYC) documents, raising concerns about potential money laundering activities. While 30,000 of these accounts were linked to Paytm Payments Bank, an additional investigation is underway to examine the remaining accounts.

The FIU has already submitted a comprehensive report on these findings to the RBI, which has subsequently requested additional information. Major lapses identified by payment banks include oversight of suspicious transactions, discrepancies in KYC documents, and the registration of multiple accounts using a single PAN number, as per the report.

A senior government official informed The Economic Times, stating, "There were 175,000 accounts which were non-compliant, out of which 50,000 were engaged in activities which were suspicious in nature and used for money laundering."

The FIU has been directed to provide a detailed report to the RBI by March 31, shedding light on the extent of non-compliance and suspicious activities. Notably, after the RBI's actions against Paytm Payments Bank, its parent company, One 97 Communications, clarified that no Enforcement Directorate (ED) probe had been initiated regarding money laundering or Foreign Exchange Management Act (FEMA) violations. The company dismissed the reports as "malicious."

This ongoing scrutiny underscores the regulatory authorities' commitment to maintaining the integrity of the financial system and ensuring robust compliance within the payments banking sector.