ED's crackdown on online gaming firms with offshore links; searches in Delhi, 4 other states
The ED operations were conducted on 25 premises in Delhi (11), Gujarat (7), Maharashtra (4), Madhya Pradesh (2) and Andhra Pradesh (1).
The Enforcement Directorate (ED) has carried out search and seizure operations under the provisions of FEMA at 25 locations across the country in a probe against foreign registered online gaming companies and websites operating in India.
The operations were conducted on Monday and Tuesday on 25 premises in Delhi (11), Gujarat (7), Maharashtra (4), Madhya Pradesh (2) and Andhra Pradesh (1), the ED said.
The online gaming companies/websites are registered in small island countries such as Curacao, Malta and Cyprus. “However, all of them are linked to Indian bank accounts opened in the name of proxy persons who have no links with online gaming activity,” the probe agency said.
The amount so collected from the public through gaming websites is then routed through multiple bank accounts and finally remitted out of India by mis-declaring the purpose of remittances against the import of services and goods. Remittances out of the income from racing, riding, etc. or any other hobby are not allowed under the provisions of FEMA, 1999," it said.
Where did ED conduct searches?
Searches were conducted on premises linked to several hawala operators, including that of Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, Abhijeet Khot and the persons/entities associated with them.
Searches have resulted in the seizure of several incriminating documents and electronic evidence related to the case and the revealing of interesting modus adopted by them to evade investigative agencies.
How do these companies operate?
> According to the ED, hundreds of companies have been opened by key persons in the name of their employees for layering and sending remittances to the tune of ₹4,000 crore approximately in the guise of payments for the import of goods and services.
> Several PAN cards, Aadhaar cards used for creating such firms, mobiles used for operating bank accounts of these firms and office stamps were also found and seized.
> Key persons were found using international virtual mobile numbers for instant messaging apps like WhatsApp, Telegram, Signal, etc. and using pseudo-names such as Pablo, John, Watson, etc. for masking their actual identity.
> To escape themselves from investigating agencies, they are using remote-based servers and laptops which are being used through remote access apps such Anydesk, Team Viewer, etc.
> “Seizures made during searches include incriminating documents and electronic devices establishing foreign outward remittances of thousands of crores collected from public through gaming websites using accounts of dummy firms opened in the name of proxy persons who are not linked with the gaming activities, Rs. 19.55 lacs in cash, US$2695 and 55 bank accounts of firms being used for layering and remitting income generated from online gaming in the guise of remittances against import of goods and services have also been freezer,” the agency said.