Money laundering suspected: More payment banks under scanner

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NEW DELHI: More payment banks may face regulatory action as the Financial Intelligence Unit (FIU) has detected about 50,000 accounts without know-your-customer (KYC) verification and potentially engaged in suspicious transactions and money laundering activities.

About 30,000 of these are with payments banks other than Paytm Payments Bank and details have already been given to the Reserve Bank of India (RBI), which is looking into these and has sought further information, said people with knowledge of the matter. The banking regulator didn’t respond to queries.

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The lapses by such banks include nonreporting of suspicious transactions, not maintaining details of beneficial owners and registration of multiple users using a single income tax permanent account number (PAN).

The FIU will send a detailed report on deficiencies affecting the payments banks before March 31.

“There were 175,000 accounts which were non-compliant, out of which 50,000 were engaged in activities which were suspicious in nature and used for money laundering,” a senior government official told ET.


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An FIU report on Paytm Payments Bank had been given to the RBI four months back, said the official. The latest report includes violations at the bank that are not just limited to KYC non-compliance.

All reporting entities, including payment gateways, are supposed to report suspicious transactions to the FIU, an investigation arm of the finance ministry empowered under the Prevention of Money Laundering Act (PMLA). It analyses the information and sends it to various intelligence agencies such as the Directorate of Enforcement and regulatory authorities like the RBI.

Section 13 of the PMLA says that afinancial institution, bank, or intermediary has to furnish details to the FIU about maintaining records of all transactions and documents on the identity of clients and beneficial owners as well as account files and business correspondence relating to clients.

The RBI had on January 31 ordered Paytm Payments Bank to stop all basic payment services through various platforms and digital avenues, including the Unified Payments Interface (UPI), with effect from February 29. ET first reported on February 3 about the ED probe into Paytm. ED was probing the Mahadev app scam and detected about 10,000 UPI accounts registered with Paytm allegedly being used for money laundering.

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