Paytm Fallout: More Payment Banks Under Scrutiny For Alleged KYC Violations, Suspicious Transactions

Amidst the continuing developments over the Paytm fallout, the Financial Intelligence Unit (FIU) has raised concerns over approximately 50,000 accounts held with payment banks that lack know-your-customer (KYC) verification, potentially involving suspicious transactions and money laundering activities.

As reported by Economic Times, around 30,000 of these accounts belong to payment banks other than Paytm Payments Bank.

As per reports, details of these accounts have already been forwarded to the Reserve Bank of India (RBI) for further investigation.

However, the RBI has yet to respond to inquiries regarding the issue.

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The reported lapses by these banks include failure to report suspicious transactions, inadequate maintenance of beneficial owner details, and the registration of multiple users under a single income tax permanent account number (PAN).

The FIU is set to submit a comprehensive report detailing these deficiencies affecting the payments banks before 31 March.

Under section 13 of the Prevention of Money Laundering Act (PMLA), financial institutions, banks, and intermediaries are mandated to provide details to the FIU concerning the maintenance of transaction records, client identity documents, beneficial owner information, account files, and business correspondence.

The RBI recently directed Paytm Payments Bank to halt all basic payment services across various platforms and digital channels, including the Unified Payments Interface (UPI), effective 29 February.

Earlier, the Reserve Bank of India (RBI) on 17 March 2018 had imposed a monetary penalty of Rs 50 million on Airtel Payments Bank for contravening the ‘Operating Guidelines for Payments Banks’ and directions issued by RBI on Know Your Customer (KYC) norms.

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