Leading Payment gateways across the country are being questioned over allegations of enabling money transfer for clients with linkages to Chinese betting apps. According to latest reports, RazorPay, a Bengaluru based Unicorn payment service provider, has been probed. It is reported that a number of Indians betting on Chinese apps were routing funds to the tax-free Cayman Islands. Any cost made by Indians to any app or a pockets should be routed via a cost gateway. This can be the primary time the ED triggered the Prevention of Money Laundering Act of 2002 (PMLA) towards the cost gateway corporations. Some reports also suggest that payment gateways may have not done adequate due diligence prior to onboarding these Chinese apps. The Enforcement Directorate may also be evaluating the legalities of invoking the Prevention of Money Laundering Act (2002) upon the payment gateways. The Foreign Exchange Management Act (FEMA) suggests that suspicious transactions are expected to be slowed down and the information shared with law enforcement officials. Besides Razorpay, it is learned that the Enforcement Directorate questioned the processes of Paytm, Bill Desk and Infibeam Avenues. 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 wallets such as Paytm, RazorPay and Cashfree. 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 online promotion of betting activities. 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. Image credited to Pixabay.
CNY - Chinese Yuan Renminbi