Several Indians were betting on Chinese apps and the money was transferred to the Cayman Islands.
This is the first time that ED triggered PMLA against payment gateway companies.
Payment gateway companies PayTM, Bill Desk and Razor Pay are under ED scanner. This is the 1st time that payment gateway companies have come under ED scanner triggered by PMLA (Prevention of Money Laundering Act 2002).
As per investigations, payment gateway companies apparently boarded Chinese apps. The investigations reveal that several Indians were betting on Chinese apps and the money was transferred to the Cayman Islands. It may be noted that any payment made by Indians to any app or a wallet must be routed through a payment gateway.
The payment gateways boarded Chinese apps and allegedly allowed processing without adequate due diligence. Investigators are now probing the role of Razorpay in the Chinese betting app case.
The company has been questioned over how it allowed Indians to bet and whether their internal systems raised any flags. PayTM and Bill Desk have also been scrutinized however these companies had not allowed such truncations and if they did, it was limited to one or two transactions. Under India’s Foreign Exchange Management Act guidelines, payment gateways are required to conduct due diligence before processing any transactions to avoid money laundering and slowing the transactions.
ED is questioning Indian payment gateways on whether they made money from the whole episode. If they did, the proceeds could be construed as “proceeds of crime.”