ED uncovers large-scale illegal remittance operation by online gaming companies violating FEMA

Share via:

The Enforcement Directorate (ED) has recently uncovered a major operation involving numerous online gaming websites and companies that allegedly violated the Foreign Exchange Management Act (FEMA), 1999, by remitting their collections to foreign countries. The ED conducted searches on May 22 and May 23, targeting companies based outside India.

In a statement on Twitter, the ED announced, “ED has carried out searches under the FEMA, 1999 on 22.5.2023 and 23.5.2023 at 25 premises in Delhi, Gujarat, Maharashtra, Madhya Pradesh & Andhra Pradesh in relation to the investigation being done against foreign registered Online Gaming companies/websites operating in India.” During the searches, the financial law enforcement agency seized incriminating documents, devices, INR 19.55 Lakh, and $2,695 in cash. Additionally, they froze 55 bank accounts.

According to the ED, the targeted online gaming companies were registered in countries such as Curacao, Malta, and Cyprus. However, all of these companies were found to be linked to bank accounts in India, opened in the names of proxy individuals who had no involvement in the online gaming activities.

Key individuals implicated in the case include Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, Abhijeet Khot, and the persons and entities associated with them. The ED stated that hundreds of such companies were established by these key individuals in the names of their employees as a means to layer and remit approximately INR 4,000 crore by falsely declaring the purpose of remittances as payments for imported goods and services.

The modus operandi involved routing funds collected from the general public through gaming websites into multiple bank accounts before finally remitting them out of India. These remittances, originating from income generated through activities like racing, riding, and other hobbies, are strictly prohibited under FEMA provisions.

The ED revealed that the indicted individuals used virtual international mobile numbers and pseudonyms to communicate via platforms like WhatsApp, Telegram, and Signal. To avoid detection by investigating agencies, they employed remote access apps such as Anydesk and TeamViewer.

This action by the ED comes at a time when the online gaming industry is gaining increased regulatory recognition from the government. Earlier this year, the Finance Bill 2023 introduced new sections pertaining to online gaming, including TDS on winnings for intermediaries and guidelines for computing taxes on income from winnings. The Ministry of Finance has also provided clarity on Tax Deducted at Source (TDS) for online gaming platforms.

Recent reports suggest that the government is considering different GST rates for games of chance and skill. Games dependent on certain outcomes or resembling betting or gambling could attract 28% GST, while games involving skill might be taxed at a lower rate of 18%. This move aims to resolve the longstanding debate surrounding the classification of games as games of chance or skill, as many state governments have imposed stricter restrictions on online gambling.

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

Popular

More Like this

ED uncovers large-scale illegal remittance operation by online gaming companies violating FEMA

The Enforcement Directorate (ED) has recently uncovered a major operation involving numerous online gaming websites and companies that allegedly violated the Foreign Exchange Management Act (FEMA), 1999, by remitting their collections to foreign countries. The ED conducted searches on May 22 and May 23, targeting companies based outside India.

In a statement on Twitter, the ED announced, “ED has carried out searches under the FEMA, 1999 on 22.5.2023 and 23.5.2023 at 25 premises in Delhi, Gujarat, Maharashtra, Madhya Pradesh & Andhra Pradesh in relation to the investigation being done against foreign registered Online Gaming companies/websites operating in India.” During the searches, the financial law enforcement agency seized incriminating documents, devices, INR 19.55 Lakh, and $2,695 in cash. Additionally, they froze 55 bank accounts.

According to the ED, the targeted online gaming companies were registered in countries such as Curacao, Malta, and Cyprus. However, all of these companies were found to be linked to bank accounts in India, opened in the names of proxy individuals who had no involvement in the online gaming activities.

Key individuals implicated in the case include Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, Abhijeet Khot, and the persons and entities associated with them. The ED stated that hundreds of such companies were established by these key individuals in the names of their employees as a means to layer and remit approximately INR 4,000 crore by falsely declaring the purpose of remittances as payments for imported goods and services.

The modus operandi involved routing funds collected from the general public through gaming websites into multiple bank accounts before finally remitting them out of India. These remittances, originating from income generated through activities like racing, riding, and other hobbies, are strictly prohibited under FEMA provisions.

The ED revealed that the indicted individuals used virtual international mobile numbers and pseudonyms to communicate via platforms like WhatsApp, Telegram, and Signal. To avoid detection by investigating agencies, they employed remote access apps such as Anydesk and TeamViewer.

This action by the ED comes at a time when the online gaming industry is gaining increased regulatory recognition from the government. Earlier this year, the Finance Bill 2023 introduced new sections pertaining to online gaming, including TDS on winnings for intermediaries and guidelines for computing taxes on income from winnings. The Ministry of Finance has also provided clarity on Tax Deducted at Source (TDS) for online gaming platforms.

Recent reports suggest that the government is considering different GST rates for games of chance and skill. Games dependent on certain outcomes or resembling betting or gambling could attract 28% GST, while games involving skill might be taxed at a lower rate of 18%. This move aims to resolve the longstanding debate surrounding the classification of games as games of chance or skill, as many state governments have imposed stricter restrictions on online gambling.

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

Website Upgradation is going on for any glitch kindly connect at office@startupnews.fyi

More like this

Data Management Maestro, The Expertise and Leadership of Siva...

New Delhi (India) April 3: Siva Karthik Devineni, a...

Meta pauses plans to train AI using European users’...

Meta has confirmed that it will pause plans...

KreditBee Subsidiary KB NBFC Raises $32 Mn In Debt...

SUMMARY KB NBFC raised the debt funding from Yubi,...

Popular

Upcoming Events

Startup Information that matters. Get in your inbox Daily!