Indian enforcement agencies have uncovered a vast money laundering network allegedly connected to Parimatch, an overseas online gaming platform. The investigation has revealed a complex web of shell companies that could be used by these platforms to launder money and evade taxes outside of India.
The Mumbai wing of the Directorate General of Goods & Services Tax Intelligence (DGGI) recently discovered a network linked to Parimatch, which is accused of channeling INR 700 Cr (around $94 million) worth of proceeds from Indian users overseas. This was done by converting the funds into cryptocurrencies to avoid taxes.
According to the DGGI, this is just one of many operations conducted by Parimatch in India. The enforcement agencies have since examined around 50 entities in Delhi and 350 networks in Kolkata to understand the money laundering scheme in more detail.
The report alleges that Parimatch communicated with its Indian contacts through phone calls and emails. The Cyprus-based company established connections with Indian conduits through unidentified individuals, whose identities were never determined.
The DGGI arrested the director of an illegal payments aggregator, who allegedly helped transfer funds from user wallets to the bank accounts of Parimatch-linked shell companies. Over 400 bank accounts were frozen during the crackdown, but a significant portion of the funds had already been converted to cryptocurrencies and moved out of the accounts.
Subsequently, a Mumbai-based crypto exchange operator was arrested for handling the shell companies. During the interrogation, the accused revealed that around INR 96 Cr (approximately $13 million) collected from Indian Parimatch users was converted into cryptocurrencies and sent to unknown entities.
However, the investigation encountered obstacles in identifying the owners of the crypto wallets and the intended recipients of the payments. The crypto operator reportedly had no knowledge of the person behind the instructions received via email and phone calls.
Further, the dummy directors of the shell entities, many of whom were drivers or roadside vendors, claimed to be unaware of the money deposited into their crypto accounts or where the funds were transferred.
Officials also traced funds linked to a Kolkata entity before the accused fled the country, possibly after converting the cash to crypto.
The investigation highlighted the role of local TV networks in advertising the betting platform. Parimatch aired ads and promotional content during live telecasts of local sports leagues, often featuring celebrities.
Multiple media management companies and television networks allegedly received emails from Parimatch for celebrity endorsements. Authorities have informed the Home Ministry about similar cases, expressing concerns over national security and suggesting measures to regulate such platforms.
Tracking the cryptocurrencies involved has proven challenging, with Israeli tools failing to yield significant results. The offshore nature of these platforms, their use of shell networks, and the anonymous nature of cryptocurrencies make tracking and investigation difficult.
In April this year, the DGGI issued notices to 38 offshore online betting and gaming platforms for money laundering and tax evasion, estimating the GST evasion amount at around INR 12,000 Cr ($1.6 billion) between April 2019 and November 2022.
To tighten regulations, the Indian government recently brought overseas online betting companies under the 28% GST bracket and directed Google to stop displaying ads from such companies. Furthermore, the Ministry of Information and Broadcasting issued advisories to broadcasters, streaming platforms, and digital news publishers against airing online betting ads.
The investigation into Parimatch underscores the need to address the challenges posed by offshore gaming platforms and their money laundering networks, highlighting the significance of regulation and the use of advanced tools to combat tax evasion and illegal activities.
