The Financial Intelligence Unit (FIU) may investigate Paytm’s Indian payment gateway amid suspicions of involvement in illegal betting transactions related to the Mahadev online betting app. There are allegations that approximately eight lakh fake UPI accounts linked to the Mahadev betting app were connected to Paytm and other payment gateways, facilitating the laundering of several hundred crores of rupees through betting transactions. Paytm is currently under scrutiny for potential lapses in KYC processes and subsequent freezing of suspect accounts.
The Reserve Bank of India (RBI) had ordered Paytm Payments Bank, on January 31, to stop all basic payment services through various platforms and digital avenues, including the Unified Payments Interface (UPI), with effect from February 29, for not complying with regulations. The FIU is expected to launch an investigation into this significant betting transaction case, following a formal request from the RBI.
The Enforcement Directorate (ED), which is also investigating the betting app Mahadev Online Book in an alleged Rs 5,500 crore money laundering scam, has found that Paytm was one of the payment gateways used by the accused to transact with customers, accepting bets through UPI.
During the investigation, the ED found that panel operators received the bets through a fraudulent UPI payment gateway and also transferred the winnings via the same Paytm and other UPI payment gateway routes. Bank accounts associated with Paytm UPI and other linked transaction gateways used in the betting operations were benami and bogus accounts.
The KYCs of unsuspecting individuals, often those who were poor, were exploited to open these bank accounts, to facilitate both accepting the bets and conducting hawala operations, which were layered through multiple bank accounts and in this manner, UPI panel operators siphoned off to funds to the Mahadev betting app founders Sourabh Chandrakar and Ravi Uppal. The probe found that over eight lakh such fake accounts with fake KYCs were used by the panel operators.
ED Findings In Mahadev App Case
ED investigation revealed that Chandrakar had monthly earnings of Rs 450 crore every month, at the average rate of Rs 30 lakh in earnings per panel every month. There are at least 2,000 panels of Mahadev Book, Reddy Anna and Fairplay which are operative as on date.
The chargesheet states that the accused, Honey Singh, a panel operator, had provided his Paytm account to Chandrakar for the deposit/ withdrawal of funds related to betting. Whenever a player won, Chandrakar would transfer money to this bank account through Subham Soni, another accused. Conversely, when a player lost, the amount deposited in Honey Singhs Paytm account was transferred to the bank account provided by Subham Soni. This account was used by Chandrakar until August 2021.
