Mumbai, Feb 19: The Directorate of Enforcement (ED), Bengaluru Zonal Office, has seized bank accounts, FDs, mutual funds and bonds of M/s Winzo Pvt. Ltd. and its subsidiary M/s Zo Pvt. Ltd. valued at Rs 590 crore under the Foreign Exchange Management Act (FEMA).
According to the ED, Winzo was into the business of hosting Real Money Games (RMG)/gambling, offering more than 100 games with a claimed user base of about 25 crore users. Winzo has made Overseas Direct Investment in its foreign subsidiaries – M/s Winzo US Inc, USA and M/s Winzo SG PTE Ltd, Singapore – by acquiring foreign exchange to the tune of USD 54,255,010 (equivalent to Rs 492 crore).
Allegations of overseas gambling operations
"Winzo has been conducting real-money gaming operations (online gambling) by offering games such as Bingo 2p, Bingo Turbo, Ludo, Snakes & Ladders, Mines, Solitaire, Spades and Black Jack, etc., in Brazil, Germany and the United States through its US-based subsidiary – M/s Winzo US Inc, USA. Winzo has parked its funds abroad under the guise of overseas direct investment; however, the entire gaming infrastructure for these overseas operations is shared and controlled from India. The foreign entities do not have any regular employees or independent establishments abroad to carry out their operations. The complete management and control of these entities, including their day-to-day functioning, is exercised by the directors and employees from India. Further, all accounting records, management of foreign bank accounts and related financial functions of the US and Singapore entities are handled from India. Winzo Singapore is earning a licensing fee from the Call-break game by licensing it to Winzo India," the ED said in a statement issued on Thursday.
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Violation of overseas investment rules alleged
"Further, ED investigation revealed that Winzo Pvt Ltd also incorporated 100% subsidiaries in the USA and Singapore, which are into gambling/real money games, which are prohibited as per the Foreign Exchange Management (Overseas Investment) Rules. Further, the foreign subsidiaries of Winzo Games are into non-bona fide business activity (not permissible under any law in force in India). The online games have been banned in India by the Promotion and Regulation of Online Gaming Act, and therefore Winzo could not have made overseas investments or continued investments after enforcement of the online gaming ban in India. Winzo is holding foreign currency and foreign income generated abroad in the bank accounts of its USA and Singapore subsidiaries from the prohibited activities in contravention of Section 4 of FEMA, to the extent of Rs 590 crore," the statement added.
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