Chinese Used Paytm Gateway For Running Online Betting In India; PMLA Imposed

After raiding 15 locations across Delhi, Gurgaon, Mumbai, and Pune, under various sections of the Prevention of Money Laundering Act (PMLA) some companies were allegedly found running illegal online betting apps linked to China. 

The Enforcement Directorate (ED)  has frozen 4 bank accounts contain a total of ? 46.96 crores.

This comes when India-China relations have been disrupted over border issues and trade with the country has been restricted as well. 

What Happened?

The cybercrime division of Hyderabad Police filed against First Information Reports (FIRs) Dokypay Technology Pvt Ltd, Linkyun Technology Pvt Ltd, and others after which, ED launched an investigation. 

“During the course of the search, ED has identified multiple bank accounts mostly held with HSBC Bank,” ED said

ED analyzed two bank accounts of Dokypay Technology Pvt Ltd. This revealed that in the last year, the account has seen a collection of ? 1,268 crores out of which ? 300 crores came via Paytm payment gateway, and around ? 600 crores were transferred out via Paytm payment gateway.

ED said, “Searches were conducted on the registered offices of the companies, their directors and chartered accountants involved in illegally running online betting apps from websites which are hosted from outside India.”

ED in its statement also said that the chartered accountants of these companies were also raided.

The probe agency has identified three accused as Yan Hao, 24, manager of Beijing Tomorrow Power Company; Dhiraj Sarkar, and Ankit Kapoor.

How Did The Companies Run The Betting Apps?

“During the investigation, it is revealed that with the help of some Indian chartered accountants, some Chinese nationals floated multiple Indian companies. Initially, dummy Indian directors were used to incorporate the companies and, after some time, Chinese nationals traveled to India and took directorship in these companies,” said the statement.

With the help of some locals, they opened bank accounts with HSBC Bank and opened trade accounts with online wallets, namely Paytm, Cashfree, Razorpay, and more.

These online wallets didn’t have strict due diligence mechanisms and their non-reporting of suspicious transactions to the regulatory authorities helped the accused companies to launch pan-India operations.

After opening the bank accounts and gaining internet access credentials major payment instructions came from the Chinese owners. 

The accused companies had set up numerous similar-looking websites that were hosted through Cloudfare, USA. These promoted online betting under the guise of e-commerce.

They attracted naive victims to become members and to place bets on various online apps, which promised attractive rewards on simple games of chance.

The payments by the victims were made by Paytm and Cashfree. The same gateways were used to pay commission to agent members.

“All websites were not activated daily. Some were activated for placing bets and the information on daily active websites was shared to members using Telegram groups,” the ED said.