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India’s government agencies are coordinating to punish online gambling-linked financial channels, with one regulator fining fintech giant Paytm more than $660,000 for breaching anti-money laundering legislation and rules, and another freezing bank accounts tied to Chinese apps.
The finance ministry’s Financial Intelligence Unit – India (FIU-IND) on Friday (March 1) said it had fined listco Paytm Payments Bank 54.9m rupees ($662,000) over violations of the Prevention of Money Laundering Act 2002.
Intelligence from law enforcement organs relating to several “entities and their network of businesses” showed the companies were “organising and facilitating online gambling” and that proceeds were “routed and channelled through [Paytm] bank accounts”, FIU-IND said in a statement.
The fine followed a show cause notice to the bank and consideration of the bank’s written and oral submissions.
Thereafter, “based on the voluminous material available on record, [the FIU-IND] found that the charges against Paytm were substantiated”.
A bank spokesperson said the violations occurred “within a business segment that was discontinued two years ago”, adding that the bank’s monitoring and reporting mechanisms had improved, the Economic Times reported on Friday.
The penalty follows reports that the Enforcement Directorate, the central government’s money laundering watchdog and a leading player in the crackdown on online gaming payments, has been probing the company over money laundering, illegal gambling and cryptocurrency irregularities since 2021.
After prohibiting Paytm from acquiring new customers in early 2023, the Reserve Bank of India on January 31 this year instructed Paytm to suspend all banking by February 29, the Economic Times reported.
Meanwhile, the Enforcement Directorate has frozen almost $15m in bank deposits after raids of businesses and homes in three cities uncovered evidence of Chinese-controlled gambling and illegal loan apps.
The directorate said on Wednesday that the ten raided locations in the cities of Mumbai, Kochi and Chennai revealed evidence of mule accounts and shell companies posing as software and service providers to mask proceeds bound for shell entities in Singapore.
The Enforcement Directorate has accelerated probes into several operational spheres of online gambling since the coronavirus pandemic served to super-charge its user base, including payments, domestic website operations and agents working for foreign-based operators.
