Paytm Row: RBI is concerned some accounts could have been used for money laundering
Paytm today dismissed the report that it was facing an investigation by the Enforcement Directorate (ED) over money laundering charges.
The clarification comes days after the Reserve Bank of India (RBI) issued a directive restricting Paytm from accepting new deposits or allowing credit transactions after February 29, 2024.
"We deny any investigation by the ED on Paytm, our associates or any executive regarding money laundering," the company said in a statement on X - earlier known as Twitter.
Hundreds of accounts created on Paytm Payments Bank without proper identification were one of the major reasons for the RBI to impose stringent curbs on the company, people familiar with the matter said.
More than 1,000 users were found to have linked the same Permanent Account Number (PAN) to their accounts.
The compliance submitted by the payments bank was found to be incorrect during verification processes conducted by both the RBI and auditors.
The RBI is concerned some accounts could have been used for money laundering, sources said.
The Enforcement Directorate will probe Paytm Payments Bank if any evidence of illegal activity is found, Revenue Secretary Sanjay Malhotra told Reuters last week.
There were also reports of non-disclosure of major transactions within the group and associated parties, further intensifying regulatory worries.
The central bank's scrutiny also unearthed loopholes in the governance standards, particularly in the linkage between Paytm Payments Bank and its parent company, One97 Communications Ltd.