Chinese Betting Racket Exposed in India
Details have emerged about the scandal that was unearthed by the Hyderabad police last month. Allegations of a Chinese sponsored gambling racket have been aired. The chief of police for the city has shed light on the scale of the operation that has seen the movement of massive amounts of money using digital channels as well as widespread money laundering.
The accusations that have been made suggest that Chinese nationals have been responsible for floating websites in India. These individuals then used the services of Indian accountants to use digital wallets to send varying sums of money that were worth Rs1,200 crore at a minimum. These same wallets were also utilized to receive similarly sized amounts of money.
Those offering the digital wallets have been found to be at fault in this respect. These companies were not performing their due diligence before the scandal was unearthed. It is expected that those operating these wallets report large amounts of rupees that are passing through the accounts that they operate. According to the authorities, this was not done to an acceptable standard despite the huge amounts that were passing through these wallets. This allowed the scandal to go unnoticed for some time.
Since the lid was first blown on the situation last month, the scale of the investigation has grown. Initially, it was just considered a police matter but once some of the details started to become clear, several other investigation bodies have become involved, as well as financial regulators. These groups are working alongside the police to find evidence of wrongdoing.
It has emerged that the money-laundering operation was highly organized and very sophisticated. This criminal enterprise was disguised as online betting operations that allowed it to escape notice from the authorities whilst it was carried out in Delhi, Haryana, Maharashtra, Madhya Pradesh, and Telangana.
The operation was so sophisticated in fact, that it would likely never have been discovered were it not for the decision to outlaw online gambling in Telangana. Back in 2017, the local government to the area voted to amend the Gaming Act to prevent citizens from partaking in online gambling and inadvertently exposed the scandal to the authorities.
The prohibition of online gambling was pivotal for the authorities to crack down on the illegal activity, so much so that in other regions the police and other agencies involved in the investigation have not been able to effectively help the victims of the racket. In other states, even if those who have lost money contact the Hyderabad police, they often have issues recovering their lost funds as a result of the legality of online gambling in these regions.
The Tactics Employed by the Crime Syndicate
The scale and planning of the operation has become apparent recently. The racket went as far as to introduce fake directors of Indian businesses that were used to establish the companies that were used in the criminal endeavor. After some time, Chinese nationals would then travel to India and would take the place as the directors of these corporations.
Following this, locals would be used by the syndicate to open accounts at banks such as HSBC, as well as online wallets that were used for trading. The online wallet accounts were opened with companies such as Paytm and Cashfree. It was these companies that were later found to have failed in carrying out the appropriate due diligence checks.
Massive amounts of money were transferred using these accounts which were not reported to the authorities by the companies that ran them. Since the criminals were not reported for these transgressions, they grew bolder, and the lack of checks led them to expand the operation into a pan-Indian enterprise.
After these bank accounts and wallets had successfully been opened in India, the login details were sent back to operators that were safely located back in China. From here, those in charge of the operation could send details of the transactions to the account holders to move the money around effectively and under the radar.
The bodies investigating the racket drew attention to the entity named Beijing T Power. This group had been setting up new companies in India and using them to provide online gambling services. It was only possible for people to sign up to these gambling websites if they were referred by another member and all payments were taken using e-payment channels to avoid the large amounts of money from being detected easily.
It has also been discovered that those that were running the operation had floated over 500 websites in a bid to launder as much money as possible. These sites were hosted using Cloudflare, a content delivery network that is based in the United States. These websites were designed specifically to attract naïve punters to sign up and place bets on the games that they offered.
Agents Used to Recruit Naïve Punters
To sell the image of legitimacy for these sites, the masterminds even went as far as to hire agents to attract new customers to the platforms. These helped the shady websites to develop a close-knit core group of users for their services.
The agents operated using Telegram and WhatsApp chats. Using these social media platforms, they were able to quickly attract a diverse group of customers with a minimal amount of effort. Using these techniques, the criminals were able to build a large network of countless Indian citizens who were exploited by the nefarious organization.
Through these platforms, the agents sent out referral codes used to give an air of legitimacy to the business. The websites were also not all active all the time, and details of which were online on any given day were sent out using the encrypted messenger services to avoid the watchful eye of the authorities.
The scam also made use of unverified mass texting campaigns that were sent out on the platforms of various phone companies. Those masterminding the illegal operations back in China requested that the texts were sent out using the leverage that they had on those involved in the telecoms industry in India. The links that were shared in the texts enabled the rapid growth of the operation after many Indians were fooled by the messages and clicked the links that they contained.
The investigation has since moved on towards those involved in the financial technology businesses that were pivotal in the scam by running the wallets used by the criminals. The authorities are also looking at potential loopholes that were exploited by the Chinese companies that allowed them to make use of the payment gateways.
There is evidence that money was redistributed into hundreds of different accounts including some that are located in China but which are held by Indian citizens. It is becoming abundantly clear, however, that the companies facilitating the online payments are at least partially responsible for the success of the scheme, but whether their involvement was intentional or just down to negligence is not yet known. What is known is that none of the required checks on payments were being made by the service providers, so it is likely that greater scrutiny will be placed on these companies in the future.
The online gambling scene in India is a growing market that is currently being tapped into by investors from other regions. European operators, for example, have been expanding their operations into India in an attempt to get in on the ground floor of online gambling in the country. This growth is partially what allowed the scandal to reach the number of people it did and is how it was so successful.