New Delhi: Multipls Indian payment gateway companies came under the control of the Enforcement Directorate (ED) under the Money Laundering Prevention Act for allowing Indian customers to transfer money to Chinese betting applications. According to surveys, several Indians were betting on Chinese apps and the money was transferred to the Cayman Islands, the Economic times mentioned in a report.
Any payment made by Indians on an app or wallet must be routed through a payment gateway. This would be the first time that the ED has triggered the 2002 Money Laundering Prevention Act or PMLA against payment gateway companies.
Investigators found that the payment gateway companies had apparently embarked on Chinese apps and allegedly authorized processing without due diligence. Investigators are investigating the role of Razorpay, the unicorn of Bengaluru, in the Chinese betting enforcement case.
Detectives questioned the company about how it allowed Indians to bet on the Chinese app and whether their internal systems had triggered red flags. Other payment gateway companies such as Cashfree, PayTM, Bill Desk and Infibeam Avenues have also been reviewed by ED.
However, they found that either these companies did not allow such truncations, or in cases where some of them did allow them, the number was limited to one or two transactions, people familiar with the matter said. evolution.
“Some of our traders were under investigation by the ED in Bengaluru. We have fully cooperated and shared all the required information. The authorities were satisfied with our due diligence protocols, ”said a spokesperson for Cashfree.
“We had categorically informed ED that we had not integrated such merchants due to our rigorous merchant verification system. We perform extensive transaction-level checks through advanced FRISK systems using AI and machine learning and we immediately dismiss any suspicious traders, ”said a spokesperson for Infibeam. Razorpay, PayTm, and Bill Desk did not respond to an ET request sent on Friday.
In accordance with the regulations, payment gateways are required to exercise due diligence before processing any transaction in order to avoid money laundering and slow down transactions in accordance with the guidelines of the Indian Foreign Exchange Management Act.
ED polls Indian payment gateways to see if they made any money from the whole episode. If they did, the proceeds could be interpreted as “proceeds of crime”. Investigators also asked Binance Holdings if it had a role in the investigation into the betting applications, Bloomberg reported on June 11.
Incorporated in the Cayman Islands, Binance has faced regulatory crackdown as countries step up scrutiny of the industry over concerns that cryptocurrencies could be used to conceal the proceeds of money laundering, drug trafficking. and terrorism, according to the report.