Centre May Bring Online Gaming Firms Like Dream11 Under PMLA, KYC Requirements And Transaction Tracking To Follow

The Centre is nearing the final stages of a decision that could place online real-money gaming companies like Dream11, Games24x7, and Winzo under the purview of anti-money laundering regulations, Indian Express reported.

These laws would impose stricter requirements on these firms, including know-your-customer (KYC) protocols, and the monitoring and reporting of suspicious transactions.

The proposal, which is being guided by the Ministry of Finance and has been dispatched for consultations between ministries, may lead to the classification of online real-money gaming firms as "reporting entities" under the Prevention of Money Laundering Act (PMLA) of 2002.

The PMLA mandates specific record-maintenance and reporting requirements for financial institutions. These institutions include banks, financial intermediaries, or individuals conducting a specified business or profession, all of which are categorised as reporting entities.

Under the PMLA, a reporting entity is required to provide client and transaction information to the Financial Intelligence Unit-India (FIU-IND), which is under the purview of the Ministry of Finance.

This entity must also adhere to several compliance obligations, such as keeping a record of all transactions and maintaining documents that verify the identity of its clients and beneficial owners. Moreover, it is required to keep account files and business correspondence related to its clients.

Additionally, adherence to anti-money laundering and combating the financing of terrorism (AML/CFT) requirements is necessary, in accordance with the standards set by the international money laundering monitor, the Financial Action Task Force (FATF).

In a comparable action taken in 2023, the Ministry of Finance had designated virtual digital assets (VDAs) as entities required to report. This measure was directly targeted at companies dealing with cryptocurrency.

Should this be concluded, it would represent the second significant measure taken against gaming companies, following the imposition of a 28 per cent Goods and Service Tax (GST) on the total deposits made by users on these applications in 2023.