This was after RBI wrote to ED in the last week of November 2023, informing it of possible breaches, they said. Within 10 days, ED wrote back to RBI in December, seeking information on the “entities” that had allegedly violated Fema.
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It is also reliably learnt that ED is likely to write to RBI seeking further information on all entities that may have committed alleged Fema and other violations on other mobile payment platforms, besides Paytm, said another top government official.
A top government official told ET on condition of anonymity that ED had, in December, sought “further information” from RBI that would be needed to start a Fema investigation.
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Suspicious Deposits
The information sought was required to identify entities that may have violated law, so action could be taken against them. The agency had also sought details on entities that had made suspiciously “huge” deposits in Paytm wallets, said one of the persons cited above.
“The entities (individuals and companies) that purportedly violated Fema norms by sending money abroad using Paytm Payments Bank first need to be investigated… In such a scenario, the mobile payment platform cannot be the prime accused,” the person said.
Once this information is received, further steps can be contemplated.
“If any lapses, for instance, non-compliance of KYC (know-your-customer) norms etc, are found on the part of a mobile payment platform, then a penalty can be imposed by RBI,” the person said. “Or, action can be taken by the Financial Intelligence Unit (FIU) of the finance ministry against the platform(s).”
He clarified that any possibility of “complicity” by platform insiders can only be uncovered once the “prime violators” are investigated.
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“If it is established that certain entities violated Fema norms, they will first be probed and brought to book,” the person cited said. “During the investigation, if it comes to light that the violators acted in cahoots with any company insiders, they will also be prosecuted. But first, the violators need to be probed. Only then the possibility of complicity, if any, can come to light.”
Likewise, if large sums have been deposited in Paytm Payments Bank, the concerned “entities” can be asked for an explanation by the agency. “If their explanation is satisfactory, then no action will be taken,” said another government official. “However, if their explanation does not add up, and it is established that money has been laundered, then requisite action can be taken against the entities under the Prevention of Money Laundering Act (PMLA).”
The official added that if it was established that large amounts of money were deposited in wallets to evade payment of income tax, then the Income Tax Department will take suitable action against the violators.
Dismissing talk of a PMLA probe by ED in the Paytm Payments Bank case, a top government official said, “A PMLA probe can only be launched in the eventuality of a predicate offence. There is none so far. There is no FIR (first information report) as of now, which could warrant a PMLA probe (against Paytm Payments Bank).”
ED will investigate Fema charges after it receives the list of entities that have allegedly committed violations, or made “suspicious” deposits in Paytm wallets.
One 97 Communications rejected reports of ED investigations on Sunday. “Neither the company nor its founder and CEO are being investigated by the ED regarding inter alia money laundering,” it had said in a statement.
RBI ordered Paytm Payments Bank on January 31 to stop all basic payment services through various platforms and digital avenues, including the Unified Payments Interface (UPI), with effect from February 29, for not complying with regulations. The regulator also barred it from offering banking services, such as accepting deposits and processing payments.