ED freezes ` 47cr in 4 accounts, unearths betting firms’ network
Indian CAs helped Chinese nationals float dummy companies
The probe into the money laundering angle involving the Chinese firm accused of running a multicrore online gaming fraud, led the Enforcement Directorate (ED) sleuths to freeze `46.96 crore held in four HSBC bank accounts besides seizing incriminating material belonging to companies involved in illegally running online betting apps from websites hosted outside India.
The ED had recently registered a case under the Prevention of Money Laundering Act based on the FIRs registered by the Central Crime Station of the Hyderabad police, which busted the fraud and arrested the Chinese national Yah Hao, the southeast head of operations of Beijing T Power Company and three senior employees of the firm.
Over the last 24 hours, the ED conducted searches at 15 locations spread across Delhi, Gurgaon, Mumbai and Pune covering the registered offices of the companies, their Directors and chartered accountants involved in illegally running online betting. Besides freezing the bank accounts, the ED seized 17 hard disks, five laptops, phones and incriminating documents.
During investigation, it was revealed that with the help of some Indian chartered accountants, the Chinese nationals floated multiple Indian companies. Initially dummy Indian directors were used to incorporate the companies. After some time, Chinese nationals travelled to India and took the directorship in these companies. “Some locals were hired and used to open bank accounts with HSBC Bank and open trade accounts with online wallets namely Paytm, Cashfree, Razorpay etc. These online wallets had lax due diligence mechanisms and their nonreporting of suspicious transactions to the regulatory authorities helped the accused companies to launch pan-India operations,” an ED official said.
Once bank accounts were opened, the internet access credentials were couriered by the Indian employees to China and major payment instructions came from the owners there. The accused companies floated a large number of similar looking websites which were hosted through Cloudflare, USA, the ED said.
These websites attracted gullible persons to become members and place bets on apps which promised attractive rewards on simple games of chance. A network of agents was hired to attract new customers. These agents created closed Telegram and WhatsApp based groups. Referral codes were used to privately invite new members which helped the sponsoring member to earn commission. Paytm and Cashfree were used to collect money and pay commission.
The ED identified multiple bank accounts mostly held with HSBC Bank. Analysis of two bank accounts of Dokypay Technology Private Limited revealed that, in the last year, the account has seen collection of `1,268 crore out of which `300 crore came via Paytm and around `600 Crore was transferred out. Account analysis of Linkyun Technology revealed a similar pattern.
It also revealed outward foreign remittances for payments of `120 crore from these accounts. “Large unexplained financial transactions are also seen with other Indian companies who are running online Chinese dating apps for Indian customers. There is a suspicion that, apart from indulging in banned activities like online betting, this network of companies with their reliance on online wallets could have been used for hawala transactions. ED is in the process of obtaining information from online wallet companies, HSBC Bank, ROC etc,” an official said.