The Enforcement Directorate (ED) conducted a nationwide crackdown on foreign registered online gaming companies suspected of laundering ₹4,000 crore. Over a span of two days starting from Monday, the ED conducted search and seizure operations at 25 premises across five States and a Union Territory to uncover the network of their operations in India and expose their illegal wealth creation under the FEMA.

Eleven premises linked to hawala operators in Delhi, seven in Gujarat, four in Maharashtra, two in Madhya Pradesh, and one in Andhra Pradesh were raided, the ED pointed out. The ED has identified hawala operators as Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, and Abhijeet Khot and stated other persons and entities associated with them too were searched during the overall operation, the ED said in an official statement released on Wednesday.

Proxy entities

Seizures made during searches include incriminating documents and electronic devices establishing foreign outward remittances of thousands of crores collected from public through gaming websites using accounts of dummy firms opened in the name of proxy persons who are not linked with the gaming activities, the ED charged.

Besides that, ₹19.55 lakh in cash, $2,695 and 55 bank accounts of firms being used for layering and remitting income generated from online gaming in the guise of remittances against import of goods and services have also been freezed.

“These online gaming companies/websites are registered in small island countries like Curacao, Malta and Cyprus. However, all of them are linked to Indian Bank Accounts opened in the name of proxy persons who have no links with online gaming activity,” the agency statement read.

“The amount so collected from general public through gaming websites is then routed through multiple bank accounts and finally remitted out of India by mis-declaring the purpose of remittances against import of services / goods,” the agency explained about the common modus operandi of siphoning money abroad. Remittances, as per the ED, out of the income from racing, riding and others, or any other hobby are not allowed under the provisions of FEMA.

Key persons, the ED probe highlighted, were found using international virtual mobile numbers for instant messaging apps like WhatsApp, Telegram, Signal, etc and using pseudo-names such as Pablo, John, Watson, etc for masking their actual identity.

The ED stated that to escape themselves from investigating agencies, they are using remote based server/laptops which are being used through remote access apps like Anydesk, Team viewer, etc.