Delhi Police EOW Cracks Down on Unlicensed Gaming Sites

ED Alleges Money Laundering of ₹4,000 Crore

Acting on a complaint by the Enforcement Directorate (ED), the Economic Offences Wing (EOW) of Delhi Police has registered an FIR and initiated a probe against a number of unlicensed online gaming platforms for violating the Foreign Exchange Management Act (FEMA) and laundering ₹4,000 crore. Read more: Delhi Police EOW Cracks Down on Unlicensed Gaming Sites.

“The accused were engaged in large-scale money laundering as well as international hawala transfer to various parts of the world,” a senior officer from Delhi’s economic and financial crime investigation unit said and pointed out that “Remittances out of the income from racing, riding, etc., or any other hobby are not allowed under the provisions of FEMA.”

The development comes on the backdrop of reports that not a single offshore-based online gaming or gambling platform has registered yet under the new tax regulations, which require foreign-registered entities providing casino, sportsbook, and other money games to Indians to pay 28% GST at par with domestic operators of such games.

Documentary Fraud Involved, Officers Reveal

The majority of the unlicensed websites that came under the radar of the fresh EOW case were operating out of China and Singapore through shell companies incorporated in India and used multiple bank accounts to wire funds abroad by “mis-declaring the purpose of remittances” claiming false import of services and goods.

Usually, the accounts were kept active for a few months, up to half a year, before being closed and new bank accounts opened. Virtual Private Networks (VPNs) and other means to mask the true identity of the gaming platforms were also employed.

“While these gaming websites were registered in foreign countries, all of them were found linked to Indian bank accounts,” the police explained.

“By using this modus operandi, they were collecting money (in hundreds of crores) from the general public through gaming websites and sending the said money out of India using illegal means such as foreign outward remittances against import of services/goods without actual business activities,” the police added.

The investigation scrutinizes the activities under 188 bank accounts linked to Indian companies and 110 bank accounts linked to entities registered out of the country.

“Of the foreign firms, 46 are based in China, 30 in Singapore, 18 in Hong Kong, seven in UAE, two in Malaysia and one each in Thailand and Mauritius. Hundreds of SIM cards were taken on forged documents by suspects linked to these portals,” the Delhi Police EOW specified.

Premises of the Accused were Searched in May 2023

The FIR names several individuals from South Delhi as alleged hawala operators, including Ashish Kakkar, residing in Greater Kailash II, and his associates, among which Punit Kumar, residing in Karampura, Shiv Dagar from Saket, and Keshav Sood from Anand Niketan.

In May last year, the ED searched the residences of Ashish Kakkar and the other alleged perpetrators of financial offenses. They recovered incriminating evidence, including forged Aadhaar and PAN cards, computer hardware, bank records, and shell company stamps.

The First Information Report alleged that Kakkar used fabricated or forged documents to create firms and companies in the names of various employees and hired individuals. Kakkar and his associates opened or incorporated these dummy firms to collect, route, and facilitate outward foreign remittances of proceeds from online gaming through foreign-registered gaming websites.

“Kakkar and his associates had devised a unique modus operandi i.c. creation of dummy firms – by using forged/fabricated documents then used the same for import/export in Special Economic Zones and outward foreign remittances against these imports made by these entities to circumvent the restrictions imposed under the provisions of FEMA. The same forged documents have also been used in the operations of bank accounts opened in the name of dummy companies/firms,” the FIR added.

ED on the Move on All Fronts, Fresh ₹580 Crore Frozen in Mahadev Case

The Enforcement Directorate has been quite busy lately on the online gaming front, with lots of work on the notorious Mahadev Online Book (MOB) case, including blocking assets worth ₹580 crore and several other gambling-related cases.

The ED has identified Hari Shankar Tibrewal, originally from Kolkata and currently based in Dubai, as a hawala operator with close links to the Mahadev gambling app and the owner of the sportsbook app SkyExchange.

During the latest Search & Seizure operations on the 28th of February, authorities seized ₹1.86 crore in cash and valuables worth ₹1.78 crore from multiple locations in Delhi, Kolkata, Gurugram, Indore, Mumbai, and Raipur.

Assets blocked under the Prevention of Money Laundering Act

At the same time, the ED blocked assets valued at ₹580.78 crore under the Prevention of Money Laundering Act (PMLA), alleging that Hari Tibrewal “beneficially owned” the assets.

Up to the moment, the Enforcement Directorate has made nine arrests. Authorities linked these arrest to the MOB gambling app. Estimates of the revenues of the whole syndicate reach ₹6,000 crore. The Enforcement Directorate made a tenth arrest of an alleged key operator, Girish Talreja. The authorities made the arrest on the 1st of March.

In November last year, a huge scandal broke. It broke when allegations surfaced that former Chhattisgarh Chief Minister Bhupesh Baghel had received bribes. The bribes were to the tune of ₹508 crore. They supposedly came directly from the MOB app promoters.

The two founders of the Mahadev app, Sourabh Chandrakar and Ravi Uppal are currently based in Dubai. They are also targeting the founders. The ED announced it was sending the necessary documents to the Ministry of External Affairs. This was at the beginning of this year, to initiate the extradition proceedings against the duo.

In the meantime, authorities froze ₹123 crores after search raids. Authorities conducted the raids in 10 locations in Mumbai, Chennai, and Kochi. They were targeting NIUM India Private Limited. According to the ED, the blocked funds belong to shell companies registered in Singapore. They are laundering the proceeds of crime. The funds are related to illegal online loans, gambling, and betting.

PayTM Bank Fined ₹5.49 Crore for Violations Related to Online Gambling

The Financial Intelligence Unit – India (FIU-IND) is the central agency for analyzing financial transaction information. It has imposed a hefty ₹5.49 crore fine on PayTM Payments Bank Limited (PPLB). FIU-IND imposed the fine due to violation of the PMLA.

On the 31st of January, the Reserve Bank of India (RBI) issued an order to PPBL. The order read to stop accepting deposits and top-ups. This goes for deposits and top-ups to user accounts and wallets. The order will be valid after the 15th of March. RBI issued the order due to large-scale non-compliance.

“FIU-IND initiated a review of the Paytm Payments Bank Ltd . FIU-IND initiated the review on receipt of specific information from law enforcement agencies. Information in respect of few entities and their network of businesses. These businesses engaged in a number of illegal acts. Including organising and facilitating online gambling.” A statement by the Union Ministry of Finance said.

“Further, the money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts. These entities with the Paytm Payments Bank Ltd maintained the accounts.

“The penalty pertains to issues within a business segment that was discontinued two years ago. Following that period. We have enhanced our monitoring systems. As well as our reporting mechanisms to the Financial Intelligence Unit (FIU).” a PayTM spokesperson reacted.