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Report: Paytm Rebuts Money Laundering Claims Amid RBI Probe

India’s banking regulator has reportedly found thousands of Paytm Payments Bank accounts created without proper identification.

The Reserve Bank of India (RBI) has turned this information over to the country’s financial crime-fighting agency, Reuters reported Saturday (Feb. 3), citing sources familiar with the matter.

According to the sources, the RBI is worried that some of the accounts in question may have been used for money laundering. 

The news comes days after the RBI ordered Paytm Payments Bank — an arm of the FinTech giant Paytm — to suspend most of its business after an audit turned up “persistent noncompliances and continued material supervisory concerns.”

One day later, a report by Bloomberg News offered more details about the RBI’s move, with sources saying the closure followed two years of warnings about the questionable relationship between Paytm and its banking business.

The RBI’s audit had apparently found that money and data traffic flow between Paytm Payments Bank and the larger company had led to accounting and supervisory problems.

In addition, the regulator was also worried by an overlap in management at the bank and the rest of Paytm, with the same executives making decisions on behalf of both organizations, leading to possible conflicts of interest.

Meanwhile, Reuters’ sources say the RBI has passed its findings to India’s Enforcement Directorate — the country’s financial crime unit — as well as the ministry of home affairs and the prime minister’s office.

A spokesman for Paytm Payments Bank told Reuters that neither it or Paytm have ever been investigated by the Enforcement Directorate.

“Some merchants using our platforms have been the subject of investigations and we answer authorities on this same as and when asked. We strongly refute money laundering allegations and caution you against speculation,” the spokesperson added.

As noted here last week, Paytm is now facing uncertainty about its license following the RBI order, which has raised concerns about its ability to continue providing digital wallet services.

Paytm — whose corporate name is One Communication Limited (OCL) — said last week that it plans to keep its digital wallet business in operation by forming new banking relationships.

“Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited,” the company said in a news release. “The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks.”