The Financial Intelligence Unit (FIU) is considering an investigation into Paytm’s Indian payment gateway amidst suspicions of its connection to illegal betting transactions linked to the Mahadev online betting app. Allegations suggest that approximately eight lakh fake UPI accounts associated with the Mahadev betting app were connected to Paytm and other payment gateways, facilitating the laundering of several hundred crores of rupees through betting transactions, reported Free Press Journal. Paytm faces scrutiny for potential lapses in KYC processes and the subsequent freezing of suspect accounts.
The Reserve Bank of India (RBI) directed Paytm Payments Bank, on January 31, to halt all basic payment services across various platforms and digital avenues, including the Unified Payments Interface (UPI), effective from February 29, for non-compliance with regulations. Following a formal request from the RBI, the FIU is expected to launch an investigation into this significant betting transaction case.
The Enforcement Directorate (ED), which is investigating the Mahadev Online Book betting app in an alleged Rs 5,500 crore money laundering scam, 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 discovered that panel operators received bets through a fraudulent UPI payment gateway and transferred 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 found to be benami (anonymous) and bogus accounts.
Exploiting the KYCs of unsuspecting individuals, often those who were economically disadvantaged, these bank accounts were opened to facilitate both accepting bets and conducting hawala operations. UPI panel operators siphoned funds to the Mahadev betting app founders through multiple bank accounts. Over eight lakh fake accounts with fabricated KYCs were identified in the probe, revealing the extent of the operation. The investigation uncovered that one of the founders had monthly earnings of Rs 450 crore, averaging Rs 30 lakh per panel monthly.
The charge-sheet indicates that Honey Singh, a panel operator, provided his Paytm account to the said founder for depositing and withdrawing funds related to betting. Whenever a player won, the money was transferred to Singh’s bank account through another accused, Subham Soni. Conversely, when a player lost, the amount deposited in Singh’s Paytm account was transferred to a bank account provided by Soni. The founder had utilised this account until August 2021.