Senior Fino Payments Bank functionary held in multi-crore GST evasion probe

New Delhi: The Directorate General of GST Intelligence (DGGI) recently arrested a senior functionary of Fino Payments Bank in an ongoing investigation into GST evasion involving online money gaming platforms that were banned, according to sources familiar with the matter.

“The investigation is related to the creation and movement of illegal proceeds through a chain of shell and non-existent entities, payment aggregators, and intermediary accounts. The preliminary findings indicate GST evasion of several crores of rupees,” the sources said.

Investigations have found that the proceeds of illegal online money gaming activities were moved through a chain of entities to mask their origin and avoid tax liability.

The role of payment channels and financial intermediaries is also being investigated, sources said.

The investigation so far has revealed that a senior bank official has allegedly been involved in the case. T

he official has been taken into custody as evidence suggests that he might be complicit in enabling the flow of money related to these fraudulent transactions. The investigation is ongoing, and further evidence is being gathered from financial records.

In the past, regulatory actions against Fino Payments Bank had been related to supervisory issues that had prompted the Reserve Bank of India (RBI) to express its supervisory concerns.

The RBI had earlier imposed restrictions on Fino Payments Bank, including restrictions on the bank from opening new accounts.

The restrictions had been imposed as the bank had violated its licensing conditions. The RBI had cited operational issues as one of the reasons for its concern.

The RBI had taken corrective measures against Fino Payments Bank. The bank had not had its license revoked.

Existing customers had been allowed to operate their accounts.

The restrictions had been lifted as the bank had taken corrective measures and had filed its compliance reports with the Reserve Bank of India.

Payment banks are under stricter regulations as they are involved with public money. These banks are expected to comply with various restrictions, know your customer, and operational guidelines.

The DGGI investigation is ongoing, and further arrests and summons cannot be ruled out.