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.

“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.

The residences of Ashish Kakkar and the other alleged perpetrators of financial offenses were searched in May last year by the ED. Incriminating evidence was recovered, including forged Aadhaar and PAN cards, computer hardware, bank records, and shell company stamps.

“These firms/companies were in the name of his (Kakkar’s) various employees/hired persons by using fabricated/forged documents. These dummy firms were opened/incorporated for collection/routing/outward foreign remittances of proceeds of crime from online gaming by the foreign registered gaming websites,” the First Information Report alleged.

“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.

Hari Shankar Tibrewal, currently based in Dubai but originally from Kolkata, has been identified by the ED as a hawala operator with close links to the Mahadev gambling app and its founders and owner of sportsbooks app SkyExchange.

Cash to the amount of ₹1.86 crore and valuables worth ₹1.78 crore were seized during the latest Search & Seizure operations conducted on the 28th of February in multiple locations in Delhi, Kolkata, Gurugram, Indore, Mumbai, and Raipur.

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

Up to the moment, the Enforcement Directorate has made nine arrests linked to the MOB gambling app and estimates that the revenues of the whole syndicate reach ₹6,000 crore. A tenth arrest of an alleged key operator, Girish Talreja, was made on the 1st of March.

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

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

In the meantime, ₹123 crores were frozen after search raids in 10 locations in Mumbai, Chennai, and Kochi targeting NIUM India Private Limited. According to the ED, the blocked funds belong to shell companies registered in Singapore and are proceeds of crime being laundered and 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), the central agency for analyzing financial transaction information, has imposed a hefty ₹5.49 crore fine on PayTM Payments Bank Limited (PPLB) for violating the PMLA.

On the 31st of January, the Reserve Bank of India (RBI) ordered PPBL to stop accepting deposits and top-ups in user accounts and wallets after the 15th of March due to large-scale non-compliance.

“FIU-IND initiated a review of the Paytm Payments Bank Ltd on receipt of specific information from law enforcement agencies in respect of few entities and their network of 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 maintained by these entities with the Paytm Payments Bank Ltd,” the document added.

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