Several payment banks could face regulatory action after the Reserve Bank of India (RBI) cracked down on Paytm Payments Bank Limited, reported The Economic Times.Â
As per the report, the Financial Intelligence Unit (FIU) has detected around 50,000 accounts, which do not have proper KYC verification. Furthermore, the report suggests that these accounts could be potentially engaged in suspicious transactions and money laundering activities.
Of the total accounts under FIU’s scanner, 30,000 accounts belong to payment banks other than Paytm Payments Bank. The details have already been sent to the RBI for further review and action, according to people quoted in the report.
However, the RBI has not yet come out with an official response on the matter.
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Why are payments banks under scanner?
These banks have failed to follow regulations by not verifying customer identities, not reporting suspicious transactions, and allowing multiple users to use the same income tax identification number (PAN), according to the ET report.
The FIU will provide a detailed report on these issues to the RBI by March 31.
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A government official quoted in the ET report said out of 175,000 non-compliant accounts, 50,000 were engaged in suspicious activities linked to money laundering. The official revealed that a FIU report on Paytm Payments Bank had been given to the RBI four months ago and added that the latest report includes violations that are beyond KYC non-compliance.
It may be noted that under the Prevention of Money Laundering Act (PMLA), financial institutions are required to keep records of all transactions and customer identities. The FIU analyses this data and shares it with enforcement agencies like the Directorate of Enforcement and regulatory bodies such as the RBI.
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Following an investigation into Paytm, the RBI has directed the company to halt certain payment services from February 29 due to alleged violations.
Additionally, the Enforcement Directorate (ED) is probing a scam involving the Mahadev app, which reportedly misused around 10,000 UPI accounts linked to Paytm for money laundering.
And now, more payment banks may face regulatory action over KYC violations and possible money laundering.
