ED Finds No FEMA Violation In Paytm Payments Bank Inquiry: Report

The report said ED also found no involvement in scheduled offences under the Prevention of Money Laundering Act (PMLA), which rules out any money laundering investigation

The RBI said merchants accepting payments using a Paytm QR code, Paytm soundbox or Paytm POS terminal can continue to use them if their receipt and transfer of funds is linked to any bank account other than PPB. ( Image Source :Paytm )

The Enforcement Directorate has found no evidence of Foreign Exchange Management Act (FEMA) violations by Paytm Payments Bank Ltd (PPBL), according to a report published in The Hindu. This comes amid speculations over the past week about FEMA violations by the company. 

In what could provide reassurance to Paytm users, partners, and stakeholders, the report said ED also found no involvement in scheduled offences under the Prevention of Money Laundering Act (PMLA), which rules out any money laundering investigation. “If no crime is made out, there is also no generation of ‘proceeds of crime’ and so, PMLA does not apply,” The Hindu report quoted a government official as saying. 

Earlier, the company had informed in an exchange filing that One 97 Communications, the parent company of Paytm, and its subsidiaries have over time been receiving notices and requisition for information, documents and explanations from the authorities, including ED. The company also said it had provided information, documents and explanations to the authorities as required. "We would also like to clarify that our associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance," Paytm said in an exchange filing. 

Additionally, a list of Frequently Asked Questions (FAQ) released by the Reserve Bank of India (RBI) on February 16 also confirmed that Paytm’s widely-used made in India QR code, soundbox, and card machine will remain operational without interruption even after March 15, 2024. The central bank said merchants accepting payments using a Paytm QR code, Paytm soundbox or Paytm POS terminal can continue to use them if their receipt and transfer of funds is linked to any bank account other than PPB. 

The company also announced transition of nodal account to Axis Bank by opening an escrow account to ensure uninterrupted merchant settlements.