The Enforcement Directorate (ED) has questioned senior executives at Paytm and collected documents from them in response to the recent Reserve Bank of India (RBI) action, which barred Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account.
The central agency is conducting a preliminary examination of these documents to decide whether to launch a formal investigation under the Foreign Exchange Management Act (FEMA) into alleged irregularities at the fintech company.
While no irregularities have been detected so far, the ED is seeking further information based on the documents provided by Paytm executives. Any contravention under FEMA will lead to the registration of a case. Additionally, an investigation under the Prevention of Money Laundering Act (PMLA) involving Paytm has been ongoing.
One97 Communications, the parent company of Paytm, and its banking arm, Paytm Payments Bank, have been receiving notices and requests for information from authorities regarding their customers. Paytm has clarified that its associate, Paytm Payments Bank Limited, does not undertake outward foreign remittances.
Earlier this month, both the ED and the Financial Intelligence Unit (FIU) requested the RBI share its report on the recent action taken against Paytm Payments Bank Ltd. The central bank had directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29.
The ED's investigation into Paytm is part of a broader money laundering probe against Chinese-controlled mobile apps accused of laundering funds through merchant IDs created on fintech platforms. Additionally, the FIU is analysing whether Paytm or PPBL followed the required procedures as a "reporting entity" under the PMLA, which mandates financial institutions to maintain records of all transactions and client identities.
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