ED raids 25 premises in FEMA probe against online gaming firms

Mumbai: The Enforcement Directorate (ED) carried out countrywide search-and- seizure operations, including in Maharashtra, under the provisions of FEMA (Foreign Exchange Management Act) at 25 premises in connection with its investigation against foreign-registered online-gaming companies/websites operating in India.

These online-gaming companies/websites are registered in small island countries including Curacao, Malta and Cyprus, ED sources said. All of them however are allegedly linked to Indian bank accounts opened in the name of proxy persons who have no links with online gaming activity, the sources said.

“ Hundreds of companies have been opened by the key persons in the name of their employees for layering and sending remittances to the tune of around ₹4,000 crore in the guise of payments for import of goods and services,” an ED official said.

“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 ED official said.

The searches were conducted on Monday and Tuesday and included four premises in Maharashtra, 11 in Delhi, seven in Gujarat, two in Madhya Pradesh and one in Andhra Pradesh.

Remittances out of the income from racing/riding, among others or any other hobby are not allowed under the provisions of FEMA, 1999. “Searches were conducted at premises linked to several hawala operators and the persons/entities associated with them. Searches have resulted in seizure of several incriminating documents / electronic evidence related to the case, revealing interesting modus adopted by them to evade investigative agencies, “ the official said.

Several Permanent Account Number (PAN) cards and Aadhar cards, allegedly used for creating such firms, mobiles used for operating bank accounts of these firms and office stamps were also found and seized by the ED. Key suspect were allegedly found using international virtual mobile numbers for instant messaging apps and using pseudo-names such as Pablo, John, Watson , among others, for masking their actual identities.

“To escape the radar of investigative agencies, they are using remote - based server/laptops, which are being used through remote access apps, “ the official said.

Aeizures 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, ₹19.55 lakh in cash, US$2,695 and 55 bank accounts of firms being used for layering and remitting income generated from online gaming have also been frozen, ED sources said.