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4,000 crore fraud in the guise of online gaming companies! ED screws on FEMA violations

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The Enforcement Directorate conducted searches and seizures at 25 locations across five states and union territories in connection with its foreign exchange violation probe against several foreign-registered online gaming companies and websites operating from India. The ED has found that companies registered in small island countries were collecting money from India and siphoning it out of the country in the name of import of services or goods.

Companies are registered in small island countries like Malta and Cyprus

During the Foreign Exchange Management Act (FEMA) probe, the ED found that companies registered in small island nations, opened by proxy persons, who had no connection with online gaming activities, were collecting money and diverting it to services or Goods were being exported out of India in the name of import.

ED raids 25 locations in five states

On Monday and Tuesday, searches and seizures of hawala operators and online gaming companies were carried out at 11 locations in Delhi, seven in Gujarat, four in Maharashtra, two in Madhya Pradesh and one in Andhra Pradesh. Those searched include hawala operators identified as Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, Abhijeet Khot and individuals or entities associated with them.

Money sent outside the country through multiple accounts

“These online gaming companies or 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 names of proxy persons who have no connection with the online gaming activity,” the ED said. The amount collected from the public through gaming websites is routed through several bank accounts and finally repatriated outside India, it said in a statement.

Foreign transfer of Rs 4,000 crore

The ED said, “Hundreds of companies have been opened by prominent persons in the name of their employees to remit and remit an amount of about Rs 4,000 crore under the guise of payment of import of goods and services. Several PAN cards, used to form such firms Aadhaar cards, mobiles and office tickets used for operating bank accounts of these firms were also found and seized.Key persons were also found to have international virtual mobile numbers for instant messaging apps like WhatsApp, Telegram, Signal etc. and using pseudonyms like Pablo, John, Watson etc. to hide their real identity.

US$ 2,695 seized

To avoid being caught by the probe agencies, the ED said, the accused persons used remote based servers and laptops through remote access apps like Anydesk, TeamViewer etc. During the searches, the ED recovered incriminating documents and electronic devices establishing foreign outward remittances worth thousands of crores collected from the public through gaming websites using accounts of dummy firms opened in the name of suspected persons, which Not associated with gaming activities. The ED said the cash, US$2,695 while the 55 bank accounts of the firms being used for layering and transfer of income generated from online gaming, were frozen under the guise of remittances against import of goods and services.

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