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“The Enforcement Directorate (ED) has questioned senior Paytm executives and taken submission of documents from them following the recent Reserve Bank of India (RBI) action of barring Paytm Payments Bank Limited from accepting deposits or top-ups in any customer account,” official sources said on February 15.
The Central agency, according to the sources, is conducting preliminary examination of documents before it decides to launch a formal investigation into the RBI-flagged alleged irregularities at the fintech company under the Foreign Exchange Management Act (FEMA).
“Some documents have been recently submitted by Paytm executives following which they were asked certain questions. Some more information has been sought,” the sources said.
“As of now, no irregularities have been detected and a case under FEMA will only be registered once any contravention under the said law is found,” they added. “An investigation under the Prevention of Money Laundering Act (PMLA) involving Paytm is already going on for some time,” they said.
One97 Communications, which provides financial services under the Paytm brand, and its banking arm Paytm Payments Bank have been receiving notices and requests for information with respect to customers of the respective entities, an exchange filing by the company said on February 14.
Paytm said its associate Paytm Payments Bank Limited does not undertake outward foreign remittances.
"One 97 Communications Limited (OCL), its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices and requisition for information, documents and explanations from the authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the authorities," Paytm said in a regulatory filing.
Paytm said the company and its associate have continued to provide information, documents and explanations to the authorities as required by them.
Earlier this month, the Enforcement Directorate and the Financial Intelligence Unit (FIU) asked the RBI to share its report on the recent action taken to bar Paytm Payments Bank Limited from accepting deposits or top-ups in customer accounts, according to sources.
The Central bank, on January 31, directed it to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29.
The ED has been probing Paytm and other online payment wallets as part of its money-laundering investigation against Chinese-controlled mobile phone apps who allegedly laundered funds using merchant IDs created on these fintech platforms.
The FIU has also sought the report from the RBI to analyse whether Paytm or PPBL followed the required procedures as a "reporting entity" under section 13 of the PMLA.
Under this section of the anti-money laundering law, a financial institution, bank or intermediary has to furnish details to the FIU about maintaining records of all transactions and documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients.
