Written By Deepti Ratnam
Money laundering cases put digital payment apps under ED scanner
Money laundering cases have increased scrutiny on digital payment apps and fintech platforms in India. Here’s how ED probes, RBI rules, and UPI regulations are impacting the sector.
Edited By: Deepti Ratnam | Published By: Deepti Ratnam | Published: Feb 12, 2026, 04:55 PM (IST)
Money laundering is one of the major financial crime issues currently in India, with major companies coming in ED’s radar. Authorities such as the Enforcement Directorate (ED) are totally invested in investigating cases against these companies. These cases are investigated under the Prevention of Money Laundering Act (PMLA) to track illegal fund flows, along with identifying entities that are involved in suspicious transactions.
In this regard, PhonePe, a leading Indian digital payments and financial services has also come under regulatory attention in case against money laundering. With over 500 million registered users, the company is involved with a gaming platform called Winzo and certain other merchants.
Here’s Why PhonePe is Summoned by ED
The UPI-based money transfer company has been summoned by Enforcement Directorate (ED) in connection with an ongoing money laundering investigation. The investigation involved online gaming platform Winzo and certain other merchants. As per report, the issue was reported in company’s updated draft red herring prospectus (UDRHP). Interestingly, the case does not mention PhonePe’s name, however, it showcases how payment platforms often become part of wider financial investigations.
ED issued summons to PhoenPe as part of a probe under the Prevention of Money Laundering Act (PMLA). The agency asked about company’s transaction details and other related documents that were processed via PhonePe’s platform.
Winzo Money Laundering Case
To recall, the Enforcement Directorate contacted PhonePe in December 2025, asking transaction details, especially related to Winzo Games and Tictok Skill Games. According to reports, ED sent letters and communications asking for information on settlements.
ED offices in Mumbai, Bengaluru and Delhi also issued summons to PhonePe between June 2024 and April 2025. They were associated with individual cases under the Prevention of Money Laundering Act (PMLA) on merchants, including Sutrulla Express and Dinero Payment Services.
The company explained that these parties have no link to its promoters, subsidiaries and key managerial employees. It claimed that it only shared information as per the law.
What Did Court Say About Data Sharing
In May 2025, PhonePe went to the Karnataka High Court to seek permission not to disclose some customer and transaction information to law enforcement bodies. The court refused the petition and decided that the payment companies should submit the appropriate information when there is some criminal investigation is going on.
According to industry gurus and experts, when this happens, firms are usually expected to provide KYC documentation and financial record of the transactions they make in order to enable law enforcement agencies to trace the flow of funds.
How RBI is Tightening KYC Norms
The frequent recurrence of payment companies involved in the fraud, illegal crypto-related, and betting application incidents has contributed to the stricter actions and oversight. The Reserve Bank of India (RBI) strengthened the KYC and due diligence policies of payment intermediaries on September 15, 2025.
In February 2025, RBI had noted that PhonePe has issues with its KYC procedures and risk management procedures. These concerns were later addressed in the company.
What is Volume Cap Risk
Another major issue that PhonePe can face ahead of its IPO is the proposed 30% UPI transaction volume cap. This cap is placed on the tech giant by the National Payment Corporation of India (NPCI). If the rule is enforced on the brand, it would have to limit the share of its transactions that is being processed by the single app.
PhonePe has 46.85 percent of UPI market share as per 30 September, 2025. The cap is now postponed to December 2026. Nevertheless the company has claimed that implementation would have an impact on its financial performance and expansion.
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PhonePe is expected to bring in Rs 3,918 crore of revenue in the first six months of FY26. Much of its revenue is through consumer payments. Any limitation on the UPI volume can affect the future earnings.
