The Directorate General of Goods and Services Tax Intelligence (DGGI) may soon recommend a probe by the Enforcement Directorate (ED) into online gaming transactions linked with Fino Payments Bank Ltd, after investigators reportedly detected multiple instances of suspected money laundering in transactions worth around Rs. 10,000 crore. Meanwhile, the Telangana High Court has reserved its order on March 17 in the case challenging the arrest of the bank’s CEO Rishi Gupta.
The development arises from an ongoing investigation into alleged GST evasion involving online betting applications, where transactions worth nearly Rs. 10,000 crore are under scrutiny. Investigators have reportedly identified cases where funds were routed through several accounts and entities in a layered manner to conceal their origin, prompting the need for deeper examination under the Prevention of Money Laundering Act (PMLA).
According to officials, the DGGI may recommend the filing of an Enforcement Case Information Report (ECIR)—a formal document similar to a police FIR—which would enable the ED to launch a detailed investigation into potential money laundering linked to the transactions.
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Authorities believe that unusual transaction patterns and movement of funds triggered the broader probe. Investigators suspect the involvement of multiple shell companies and dummy programme managers who allegedly facilitated the onboarding of merchants on the bank’s platform. Officials claim these entities may have been used to layer and conceal funds, potentially violating provisions of the anti-money laundering law.
The investigation gained prominence after the Hyderabad unit of the DGGI arrested Rishi Gupta, the chief executive officer of Fino Payments Bank, last week. Following his arrest, the Navi Mumbai-based payments bank appointed its chief financial officer Ketan Merchant as the interim CEO.
Responding to media queries, Fino Payments Bank rejected claims that the investigation could expand to include alleged violations under the PMLA or involve the ED. The bank stated that such assertions were “incorrect and speculative.”
The bank clarified that, as disclosed in its regulatory filings, it is currently under investigation only by the DGGI and not by any other enforcement agency. It further emphasised that the DGGI inquiry relates to certain programme managers or merchants associated with multiple banks, including Fino Payments Bank, and does not concern the GST compliance of the bank itself.
Fino Payments Bank said it is fully cooperating with investigators and providing all necessary information related to the programme managers and merchants under scrutiny. The bank also assured that it would keep stock exchanges and stakeholders informed of any material developments in the case.
Investigators, however, allege that large volumes of funds linked to online gaming services were processed through the bank’s platform without proper tax compliance, and that dummy merchants may have been onboarded to facilitate transactions without issuing invoices.
Officials said the probe is still underway and could take time. A detailed report on the findings so far is expected to be submitted to the Finance Ministry soon.
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