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Numerous Paytm Payments Bank accounts, thousands of which were opened fraudulently and used to launder money

According to three people with knowledge of the situation, India’s central bank discovered thousands of Paytm Payments Bank accounts that were opened without the required documentation. It has since forwarded this information to the nation’s financial crime fighting organization.

Speaking on condition of anonymity, the sources stated that the Reserve Bank of India (RBI) is worried that some of the accounts may have been used for money laundering.
They also stated that the RBI has notified the Prime Minister’s Office and the Ministry of Home Affairs of its findings in addition to the Enforcement Directorate.

A Paytm Payments Bank representative stated, “One 97 Communications Ltd. and Paytm Payments Bank have never been probed by the Enforcement Directorate,” referring to the bank’s parent company, the widely known digital payments operator

“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.

Requests for comment made outside of regular business hours were not answered by the RBI, the Enforcement Directorate, the Finance Ministry, the Home Ministry, or the Prime Minister’s Office. Paytm Payments Bank was given an order by the RBI on Wednesday to shut down the majority of its operations, including its well-known wallet, credit products, and deposits, by February 29. Without providing further information, it cited “persistent non-compliances and continued material supervisory concerns in the bank.”

Revenue Secretary Sanjay Malhotra told Reuters on Saturday that if any evidence of illegal activity is discovered, the Enforcement Directorate will look into Paytm Payments Bank.

In the two days that followed the RBI’s action against Paytm’s bank, the company’s stock fell 36%, wiping out $2 billion of its market value.

During a conference call with analysts on Thursday, Paytm’s founder and rising star of the Indian startup scene, Vijay Shekhar Sharma, called the RBI’s action a “speed bump.”

According to two of the sources, the same identity proof was used to link multiple Paytm Payments Bank accounts, and those accounts had transactions totaling millions of rupees.

One of them added that a “relatively” high number of inactive accounts had been discovered.