Leading Payment gateways across the country are likely being questioned over allegations of enabling money transfer for clients with linkages to Chinese betting apps.
News reports indicated that the Enforcement Directorate was scrutinizing the operations of leading payment gateway service providers including a Bengaluru based Unicorn startup.
It has been alleged that betting money was routed to China and even the tax-free Cayman Islands.
There is a belief that payment gateways in India may not have performed adequate due diligence prior to onboarding such Chinese apps.
Transactions by Indians routed via a cost gateway have to be scrutinized by the service providers. Their failure to do so may have cost crores of money being transferred to tax-free destinations.
The Foreign Exchange Management Act (FEMA) suggests that suspicious transactions are expected to be slowed down and the information shared with law enforcement officials.
The Enforcement Directorate may also be evaluating the legalities of invoking the Prevention of Money Laundering Act (2002) upon the payment gateways.
The case of the Chinese betting apps surfaced in August last year after India banned 106 Chinese apps.
Despite the ban, many Chinese apps were found operational and conducting betting dens.
At that time the ED had reportedly found 94 apps and froze Rs 47 crores of money lying with the accounts of these Chinese companies.
The Chinese apps adopted a sophisticated model of operations.
They would hire locals to create accounts with leading wallet service providers.
These account details would then be transferred to China via courier. The system also saw hiring of agents who were paid money for operating Telegram and Whatsapp accounts and to promote these betting dens online.
In fact, a Hyderabad enforcement team was reported as having discovered collections of Rs 1,268 crores from a Paytm account linked to DokyPay Technologies.
Disclaimer: The story has been edited after a representative of a payment gateway service provider reached out to Sifydotcom. This service provider has not refused the angle of an ED probe but it refused the connection with Chinese betting apps. Image credited to Pixabay.