Gaming transactions linked to Fino Bank may face ED probe
Gaming transactions linked to Fino Bank may face ED probe
The Directorate General of Goods and Services Tax Intelligence (DGGI) is mulling a recommendation for an Enforcement Directorate (ED) probe into online gaming transactions linked to Fino Payments Bank Ltd, according to The Economic Times.
The move comes after investigators uncovered several instances of suspected money laundering, where funds were allegedly routed through multiple accounts or entities to obscure their origin.
Probe linked to broader investigation into online betting apps
The DGGI's potential recommendation for an ED probe is tied to a broader investigation into alleged GST evasion by online betting apps. This involves transactions worth around ₹10,000 crore.
The DGGI is likely to recommend filing an Enforcement Case Information Report (ECIR), similar to a police FIR, which would trigger a detailed investigation by the ED.
Not under any investigation, says Fino Payments Bank
Responding to ET's query, Fino Payments Bank refuted the claims that the ongoing DGGI investigation could extend to alleged violations under the Prevention of Money Laundering Act (PMLA).
The bank said it is not under any investigation by any authority other than the Director General of GST Intelligence.
It clarified that DGGI's inquiry relates to certain program managers or merchants associated with multiple banks, including itself.
Allegations of money laundering and shell companies
The DGGI is concerned about the presence of multiple shell companies and dummy program managers controlling merchant onboarding.
These practices, they believe, warrant a detailed examination by the ED into how funds were layered, concealed or moved in violation of the PMLA.
The investigators allege that large volumes of funds were processed through Fino Payments Bank's platform without proper tax compliance.
Case gained attention after CEO's arrest
The case gained public attention after Rishi Gupta, the CEO of Navi Mumbai-headquartered payments bank, was arrested by Hyderabad unit of DGGI last week. A Telangana court rejected Gupta's bail petition.
His counsel argued that Fino Payments Bank only provides infrastructure for transactions and is not responsible for tax compliance of sellers or buyers.
The bank has also paid GST demand raised by the department.