KYC, fund laundering concerns said to spur RBI’s Paytm unit ban
- The Reserve Bank of India’s (RBI) action directing Paytm Payments Bank Ltd. (PPBL) to cease all new business transactions by February 29.
Key Highlights
- Rbi asked bank to settling all pipeline transactions by March 15, was triggered by major irregularities in the bank’s compliance with Know Your Customer (KYC) norms,
- Thus exposing customers, depositors and wallet holders to grave risk, said people aware of the developments.
- RBI supervisors and external auditors are learnt to have found:
- KYC details missing for a very large number of customers (running into lakhs)
- PAN validation failures in lakhs of accounts
- A single PAN used for multiple customers
- in thousands of cases the same PAN was linked to more than 100 customers and in some cases to more than 1,000 customers
Money laundering concern
- The bank was also found to be involved in facilitating transactions running into crores of rupees
- Well beyond regulatory limits in prepaid instruments with minimal KYC requirements, raising money laundering concerns
- An unusually high number of dormant accounts were found to have been used as ‘mule accounts’ to facilitate transactions.
- The recent direction from RBI is a part of the ongoing supervisory engagement and compliance process
- The payments bank is accused of not adhering to the ‘arm’s length policy’ while dealing with the Promoter Group Entities.
- Its financial and non-financial business were co-mingled with its promoter group companies in violation of licensing conditions
Prelims Takeaway
- Paytm bank
- Reserve Bank of India