ED Uncovers Rs 2,000-Crore Betting Proceeds Routed Abroad As AI Investments
The Enforcement Directorate in Mumbai has uncovered a money laundering mechanism in which illegal betting syndicates disguise illicit earnings as legitimate investments in artificial intelligence and overseas technology ventures. The federal probe agency suspects that over Rs 2,000 crore has been moved out of the country by betting networks using these purported overseas investment structures.
A major trail was unearthed during an ongoing investigation into Parimatch, a Cyprus-based betting platform that is banned in India but continues to operate through multiple mirror websites. According to the agency, more than Rs 200 crore in suspected proceeds of crime was routed out of India through purported investments in overseas technology ventures, including firms claiming to operate in AI and AI solutions. Investigators traced the funds from remittances made by two Delhi-based companies to entities in Singapore that were found to possess limited commercial substance.
Investigators stated that the overall modus operandi involves several layering stages before illicit funds reach offshore destinations. In the first layer, newly incorporated domestic companies are floated shortly before receiving betting proceeds. These domestic firms then transfer the capital to overseas entities, primarily based in Singapore, which are also set up shortly before receiving the remittances.
Both the domestic and foreign entities were found to have dummy directors and showed little discernible commercial activity, with several entities disappearing or turning inactive after completing the transactions. The remittances were presented as Overseas Direct Investment in foreign technology entities. To lend credibility to the deals, operators allegedly misused the Discounted Cash Flow valuation method to assign artificially high valuations to newly formed companies despite their lack of revenue, assets, or operating history.
An official familiar with the investigation stated that the foreign companies in Singapore offered a cover to disguise the transactions as investments by domestic companies into AI ventures. The official noted that the use of a sophisticated valuation exercise lent the transactions the appearance of genuine technology investments while obscuring the origin and ultimate destination of the money.
The role of several company secretaries who assisted in conducting the Discounted Cash Flow valuations is now under the agency's scanner, and the Enforcement Directorate is likely to apprise the Reserve Bank of India of its findings. The investigation further revealed that Parimatch generated more than Rs 3,000 crore from Indian users within a single year. In September, the agency conducted searches targeting payment companies, chartered accountants, and company secretaries across multiple locations in Maharashtra, Delhi-NCR, Rajasthan, and Gujarat.
