after-paytm-more-payments-banks-under-rbi-scanner-for-money-laundering-report

The Reserve Bank of India (RBI) has initiated strict actions against Paytm Payments Bank Limited, leading to concerns over the compliance of several other payment banks. According to reports, a crackdown by the Financial Intelligence Unit (FIU) has unearthed approximately 50,000 accounts across various payment banks lacking proper Know Your Customer (KYC) verification processes.

 

These accounts are suspected to be involved in dubious transactions and potential money laundering activities, raising alarm bells within regulatory circles. The FIU's investigation has widened the scope of scrutiny to include other payment banks besides Paytm Payments Bank, with 30,000 such accounts falling under its scanner.

 

Details of these findings have been promptly forwarded to the RBI for further evaluation and necessary actions, sources familiar with the matter disclosed.

 

While the RBI has refrained from issuing an official statement at the time of reporting, the gravity of the situation highlights the urgency for regulatory intervention in the payment banking sector.

 

The root cause of concern lies in the blatant disregard for regulatory protocols observed by these banks. Instances of non-compliance include the failure to conduct proper customer identity verification, neglect in reporting suspicious transactions, and allowing multiple users to operate with the same income tax identification number (PAN).

 

The FIU is slated to furnish a comprehensive report on these transgressions to the RBI by March 31, shedding light on the extent of regulatory violations within the payment banking ecosystem.

 

A government official cited in the report divulged alarming statistics, indicating that out of a total of 1,75,000 non-compliant accounts identified, a staggering 50,000 were associated with suspicious transactions indicative of money laundering activities.

 

The official further revealed that the FIU's investigation into Paytm Payments Bank, initiated four months ago, had unveiled violations extending beyond mere KYC non-compliance.

 

Under the ambit of the Prevention of Money Laundering Act (PMLA), financial institutions are mandated to maintain meticulous records of all transactions and customer identities. The FIU, entrusted with the task of scrutinizing such data, collaborates with enforcement agencies like the Directorate of Enforcement and regulatory bodies such as the RBI to curb financial malfeasance.

 

The recent crackdown on Paytm Payments Bank by the RBI, resulting in directives to suspend certain payment services from February 29, highlights the regulatory resolve to uphold compliance standards within the industry.

 

The Enforcement Directorate (ED) has initiated investigations into an alleged scam involving the Mahadev app, which reportedly exploited approximately 10,000 UPI accounts linked to Paytm for laundering illicit funds.

 

With the specter of regulatory action looming large, other payment banks could soon find themselves in the crosshairs over KYC violations and potential involvement in money laundering schemes.