Indian Payment Gateway Firms Under ED Scanner For Facilitating Money Transfer To Chinese Betting Apps: Report
The Enforcement Directorate is investigating several Indian payment gateway firms under the Prevention of Money Laundering Act (PMLA) for allegedly allowing Indian costumers to transfer money to Chinese betting apps, reports Economic Times.
The ED probe revealed that several Indians were betting on Chinese apps and the money was transferred to the Cayman Islands, a tax haven.
It should be noted that payment made by Indians to any app or a wallet must be routed through a payment gateway.
As per the current regulations, payment gateways are required to conduct due diligence before processing any transactions to avoid money laundering and slowing the transactions under India's Foreign Exchange Management Act (FEMA) guidelines.
According to the report, this would be the first time the payment gateway firms are facing ED probe against the PMLA law, which was enacted in 2002.
The ED sleuths have reportedly found that these firms apparently boarded Chinese apps and allowed processing without adequate due dilligence.
The ED investigators have so far scrutinises several payment firms such as Cashfree, Paytm, Bill Desk and Infibeam Avenues in this regard.
However, ET quoted people aware of the development as saying that the agency found that either these firms had not allowed such transactions or in cases when some of them did allow them, the number was limited to one or two transactions.
Currently, the agency is probing the role of Razorpay, a Bengaluru based unicorn, in the Chinese betting app case. The investigators have questioned the firm over how it allowed Indians to bet on the Chinese app and whether their internal systems raised any red flags.
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