India seeks FATF oversight for online gaming to curb money laundering risks

India is pushing for online gaming companies to be brought under the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) framework, according to a report by The Economic Times. The government has started internal discussions and is exploring ways to enforce strict know your customer (KYC) protocols and the mandatory reporting of suspicious activities by these companies.

New Delhi is expected to raise this issue again at the upcoming meeting of the Financial Action Task Force (FATF) in Paris, with officials highlighting the misuse of online gaming platforms like Mahadev Apps for money laundering.

The report quoted an official as saying that India will once again present its case on why these platforms need to be regulated under global standards.
 

 

It says, the government’s objective is not to hinder the growth of the online gaming sector but to protect it from money laundering risks. If the FATF includes the sector within the AML/CFT framework, gaming platforms would need to adhere to KYC norms and report suspicious transactions, including identifying their beneficial owners.

Betting scandal unveiled

Last year, the Enforcement Directorate (ED) uncovered an illegal betting network linked to the Mahadev Online Book platform, which offered various games like cards and online cricket. The ED suspects the platform was involved in match-fixing and money laundering through cryptocurrency. Another official expressed concerns about cross-border financial transfers, especially with gaming apps that operate from foreign jurisdictions and cater to Indian users, as mentioned by the report.

Gaming laws tightened

The government has already made it compulsory for foreign gaming companies to register in India, though compliance has been limited. In March 2023, the government extended the Prevention of Money Laundering Act (PMLA) to cover specific activities related to virtual digital assets. 

While there were initial concerns that online gaming platforms might have to comply with PMLA due to their involvement with cryptocurrencies, the current reporting requirements remain restricted to crypto exchanges, and gaming companies are not yet covered under the law, the report said.