India Seeks FATF Control for Online Gaming to Reduce Risks of Money Laundering

As per a report published by a media house, India is actively advocating for the inclusion of online gaming companies within the framework of the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) systems. To implement stringent KYC rules and the mandatory reporting of suspicious activity by these organizations, the government has initiated internal conversations and is currently investigating potential methods to address these issues.

It is anticipated that New Delhi will bring up this matter once more at the upcoming conference of the Financial Action Task Force (FATF) in Paris. Officials from New Delhi are expected to bring attention to the fact that online gaming platforms such as Mahadev Apps are being used for money laundering.

An official's statement reported in the report mentioned that India will once again submit its line of reasoning regarding the necessity of these platforms being governed by global standards.

The government's goal, according to the report, is not to hamper the expansion of the online gambling industry but rather to safeguard it against the hazards of money laundering. Gaming platforms would be required to comply with Know Your Customer (KYC) standards and report suspicious transactions, including the identification of the beneficiaries of the transactions if the FATF were to bring the industry under the AML/CFT framework.

Gambling Controversy Exposed

An unlawful betting network that was connected to the Mahadev Online Book platform was discovered by the Enforcement Directorate (ED) in the 2023. This platform featured variety of games, including online cricket and card games. Match-fixing and money laundering through bitcoin are two activities that the ED believes the platform may have been involved in.

As indicated in the report, another official voiced his concerns regarding the transfer of funds across international borders, particularly in relation to gaming applications that are based in foreign countries but cater to users in India specifically.

Tighter Gaming Regulations

Despite the fact that compliance has been limited, the government has already made it mandatory for overseas gambling enterprises to register in India. The scope of the Prevention of Money Laundering Act (PMLA) was expanded by the government in March 2023 to include certain acts that are associated with virtual digital assets.

According to the study, there were initial concerns that online gaming platforms might be required to comply with PMLA due to their participation with cryptocurrencies. However, the obligations continue to be restricted to cryptocurrency exchanges, and gaming companies are not yet taken into consideration by the law.

In the Indian Online Gaming Space, DGGI Discovered Tax Evasion of INR 81,875 Crore in FY24

A total of 78 instances were investigated by the Directorate General of GST Intelligence (DGGI), which is the central investigative and anti-evasion arm of the finance ministry.

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