Initial GST probe findings in Fino Payments Bank case point to shell network in illegal gaming: Sources

Rishi Gupta, Fino Payments Bank

Initial findings in the Goods and Services Tax (GST) investigation linked to Fino Payments Bank indicate suspected tax evasion of several crores connected to banned online money gaming operations, with investigators examining a web of shell and non-existent entities and the use of payment channels to route funds, according to sources familiar with the matter.

The Directorate General of GST Intelligence (DGGI) is probing what sources described as a case involving illegal online money gaming and alleged GST evasion through layered financial structures.

“In the Fino Payments Bank case arrest, DGGI is investigating a case of online money gaming, which is banned,” sources in the know said.

Shell entities and payment aggregators under scrutiny

According to the sources, “Initial investigation indicates GST evasion of several crores involving many shell and non-existent entities, payment aggregators etc. which have been used to funnel the illicit funds being generated by online money gaming.”

Shell entities typically exist largely on paper and may have limited or no genuine business operations. Such entities are sometimes used to layer transactions and obscure the source of funds.

Rs 3,000 crore linked to betting app transactions

Sources said investigators now suspect that nearly Rs 3,000 crore linked to betting app transactions may have been routed through formal banking channels as part of the alleged network under scrutiny. The broader online betting ecosystem being examined is estimated to involve transactions worth around Rs 13,000 crore, people familiar with the matter said.

According to sources, the probe is centred on allegations that funds generated through betting applications were moved through a web of entities, including Wegofin Digital Solutions Private Ltd and PSRao Digital Solutions Private Ltd. Authorities have identified certain directors of these firms among the accused in the case.

Investigators have named Wego Fin directors Vennapusa Rajasekhar Reddy and YS Prabhu Kumar as part of the alleged network, the sources added.

Arrest earlier

Rishi Gupta, Managing Director and Chief Executive Officer of Fino Payments Bank, was arrested under the Central Goods and Services Tax (CGST) Act and State GST provisions, as disclosed earlier by the bank in a stock exchange filing.

The company had stated that the arrest pertained to a GST investigation and that its operations remained unaffected.

The DGGI, the intelligence and enforcement arm under the GST framework, is tasked with detecting tax evasion and fraud. The investigation in the Fino Payments Bank case remains ongoing.