Enforcement Directorate questions Paytm executives amid RBI action

ED questions Paytm: The Enforcement Directorate (ED) has initiated questioning of senior Paytm executives and obtained submission of documents from them following the recent Reserve Bank of India (RBI) action restricting Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account, media reports revealed on Thursday.

According to sources, the central agency is in the preliminary stage of examining documents before determining whether to launch a formal investigation into alleged irregularities flagged by the RBI at the fintech company under the Foreign Exchange Management Act (FEMA).

Paytm executives recently submitted some documents, after which they were queried on specific matters. Additional information has been requested, the media reports confirmed.

As of now, no irregularities have been identified, and a case under FEMA will only be registered if any violations under the law are uncovered, they clarified.

Investigations under PMLA

An ongoing investigation under the Prevention of Money Laundering Act (PMLA) involving Paytm has been underway for some time, the sources added.

In an exchange filing on Wednesday, One97 Communications, the parent company of Paytm, disclosed that both the company and its banking arm, Paytm Payments Bank, have been receiving notices and requests for information concerning their respective customers.

Paytm reiterated that its associate, Paytm Payments Bank Limited, does not conduct outward foreign remittances.

RBI's report

Earlier this month, the ED and the Financial Intelligence Unit (FIU) reportedly requested the RBI share its report on the recent measures taken to restrict Paytm Payments Bank Ltd from accepting deposits or top-ups in customer accounts.

The central bank's directive, issued on January 31, instructed Paytm to cease accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29.

The ED has been examining Paytm and other online payment wallets as part of its money laundering investigation against Chinese-controlled mobile applications allegedly involved in fund laundering via merchant IDs established on these fintech platforms.

Furthermore, the FIU has sought the RBI's report to assess whether Paytm or PPBL complied with the required procedures as a "reporting entity" under Section 13 of the PMLA. This section mandates financial institutions to furnish details to the FIU regarding maintaining records of all transactions and documents verifying the identity of clients and beneficial owners, along with account files and business correspondence relating to clients.

(with PTI inputs)