Hyderabad: Illegal online betting platforms allegedly channelled nearly ₹70,000 crore through about 750 shell companies across the country, leading to an estimated GST evasion of ₹19,600 crore, according to an ongoing probe by the Directorate General of GST Intelligence (DGGI).The investigation has so far led to the arrest of four senior executives linked to fintech, banking and verification service providers, while several others are absconding.Investigators have uncovered a network of technology vendors, resellers, payment aggregators, shell companies and mule-account operators who allegedly helped betting platforms collect, move and conceal funds.How the money trail workedAccording to the DGGI, the online betting operation began with the creation of betting websites such as funinmatch365.com and racejeet247.com. Alongside the websites, shell companies posing as legitimate businesses, including IT and travel firms, were set up to obtain payment-processing facilities.These shell companies were registered with payment aggregators as genuine merchants.Once players deposited money through UPI and other digital payment modes, the funds were routed through a series of accounts controlled by different entities. The money was then transferred to unrelated individuals, shell companies and mule accounts under the guise of legitimate business payments.According to investigators, the funds were moved through multiple layers to disguise their origin before being withdrawn as cash or converted into cryptocurrency and passed on to the ultimate beneficiaries.Weak checks enabled operationsThe probe found serious gaps in customer verification procedures while opening accounts for shell companies. Investigators also found inadequate checks to ensure whether the merchants were actually conducting the business activities they had declared.The DGGI further flagged the use of automated payment systems to transfer funds to unrelated accounts despite the absence of genuine commercial transactions.According to the findings, banks were aware of unusual transaction patterns but allegedly did not raise sufficient red flags. Investigators have also questioned why enhanced scrutiny was not applied to accounts handling transactions worth thousands of crores, including some entities whose GST registrations had already been cancelled.Recovery remains a challengeInvestigators said tracing the operators behind the betting platforms has been difficult because many use virtual private networks (VPNs) and encrypted communication channels to conceal their identities and locations.The rapid movement of funds through multiple accounts, cash withdrawals and cryptocurrency transactions has further complicated efforts to trace and recover the money. Delays in obtaining financial information have also hampered the investigation.To plug regulatory gaps, the DGGI has recommended tighter RBI oversight, strengthening controls over digital payout systems and making it mandatory to record the originating website for every payment request.The agency has also proposed the creation of an Online Gaming Authority of India, disclosure of all bank accounts linked to GST registrations and real-time location access for investigative teams tracking key suspects.
