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Razorpay, PayTM, Bill Desk under ED scanner for allowing money transfer to Chinese betting apps

Multipls Indian payment gateway companies have come under the scanner of the Enforcement Directorate (ED) under prevention of money laundering act for allowing Indian customers to transfer money to Chinese betting apps. As per the investigations several Indians were betting on Chinese apps and the money was transferred to the Cayman Islands, the Economic Times mentioned in a report.

This would be the first time the ED triggered Prevention of Money Laundering Act of 2002 or PMLA against payment gateway companies. It may be noted that any payment made by Indians to any app or a wallet must be routed through a payment gateway.

According to the publication, investigators have found that payment gateway companies apparently boarded Chinese apps and allegedly allowed processing without adequate due diligence. Investigators are probing the role of Razorpay, the Bengaluru unicorn, in the Chinese betting app case.

Sleuths have questioned the company over how it allowed Indians to bet on the Chinese app and whether their internal systems raised any red flags. Other payment gateway companies such as Cashfree, PayTM, Bill Desk and Infibeam Avenues too were scrutinised by ED, the financial daily mentioned.

However, they found that either these companies had not allowed such truncations or in cases when some of them did allow them, the number was limited to one or two transactions, the publication mentioned citing people aware of the development.

“Some of our merchants were being investigated by the Bengaluru ED. We have cooperated fully and shared all the required information. The authorities were satisfied by our due diligence protocols,” the ET report quoted a Cashfree spokesperson as saying.

“We had categorically informed ED that we did not on-board any such merchants due to our rigorous merchant verification system. We have in-depth transaction level checks via advanced FRISK Systems using AI and machine learning and we reject any suspicious merchant straight away,” an Infibeam spokesperson told ET. Razorpay, PayTM and Bill Desk did not respond to a query sent by the publication on Friday.

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.” Investigators have also questioned Binance Holdings on whether it had any role to play in the investigation involving betting apps, Bloomberg reported on June 11.

Incorporated in the Cayman Islands, Binance has been facing regulatory crackdown as nations intensify scrutiny of the industry amid concerns that cryptocurrencies are being used to conceal proceeds of money laundering, drug dealing and terrorism, the report said.

 

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