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Online Gaming

Unscrupulous operators are using shell companies and digital channels to launder money through online gaming, necessitating stricter regulatory oversight under the PMLA. The integration of virtual assets in online gaming will enhance accountability and security against threats like terror financing and cyber fraud. However, challenges such as the use of mule accounts, cross-border jurisdictional issues, and evolving fraud techniques complicate the enforcement of anti-money laundering regulations.

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10 views2 pages

Online Gaming

Unscrupulous operators are using shell companies and digital channels to launder money through online gaming, necessitating stricter regulatory oversight under the PMLA. The integration of virtual assets in online gaming will enhance accountability and security against threats like terror financing and cyber fraud. However, challenges such as the use of mule accounts, cross-border jurisdictional issues, and evolving fraud techniques complicate the enforcement of anti-money laundering regulations.

Uploaded by

keertipanwarmscmaths
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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6/8/25, 2:01 PM (04 Jun, 2025)

Unscrupulous operators use shell companies, crypto wallets, and digital


channels to launder illicit money.

This complex scenario highlights the need to bring online gaming under the
stringent regulatory ambit of the PMLA to curb financial crimes and enhance
oversight.

Strengthening Accountability: The 2023 PMLA rules extended regulatory oversight

 to virtual asset service providers, enabling the Financial Intelligence Unit-India


(FIU) to better monitor and penalize violations.

By integrating virtual assets in online RMG under this framework helps to



maintain transaction records and report suspicious activities, further enhancing
accountability in the gaming ecosystem.

Terror Financing: Online RMG poses a serious threat of terror financing due to its
anonymous and borderless nature. Terror operatives may exploit gameplay as a
 covert channel to communicate and facilitate illicit transactions within the RMG
ecosystem.

 By integrating RMG under PMLA, it can be effectively secured and monitored by


national security authorities.

 Cyber Security: India’s cybersecurity infrastructure remains inadequate to fully


safeguard emerging digital platforms, including online gaming.

Online gaming platforms can be exploited to deploy trojans or malware,



potentially compromising users’ bank accounts and causing financial losses.

Integrating under the PMLA will enhance regulatory oversight and reduce risks of

cyber fraud and bank-related losses.

What are the Challenges in Enforcing Anti-Money


Laundering Regulations on Online Gaming Platforms?

Use of Mule Accounts and Proxy Payment Channels: Illicit gaming platforms
frequently use “mule” bank accounts or third-party wallets to route payments.

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6/8/25, 2:01 PM (04 Jun, 2025)

These accounts are often registered in the name of unrelated individuals or shell
entities, obscuring the transaction’s origin and purpose.

Online gaming platforms process thousands of micro-transactions every minute,


making it difficult to detect suspicious patterns in real time. Automated systems
must be exceptionally robust to flag illicit activity without disrupting legitimate
gameplay.

Misuse of In-Game Purchases and Digital Wallets: Players can convert real money
 into in-game assets or digital currencies, which can be exchanged, gifted, or
withdrawn as real money often without traceability.

 Multiple funding methods (Unified Payments Interface, cards, wallets, crypto,


etc.) create unstructured inflow and outflow patterns that are hard to monitor
comprehensively. Integration with banking systems for AML checks remains
inadequate or inconsistent.

Cross-Border and Jurisdictional Issues: Gaming platforms may be registered in


 foreign countries, making coordination between regulatory authorities across

borders difficult.

 Different jurisdictions have varying AML laws, complicating enforcement and


compliance monitoring.

 Offshore sites like 1xBet frequently change domains and bank partners, making
enforcement and prosecution highly complex.

 Difficulty in Proving Intent: Distinguishing between high-stakes gaming and


deliberate money laundering can be difficult.

Players might claim high volumes or rapid transactions are part of legitimate

gameplay.

Evolving Fraud Techniques: Money launderers are constantly adapting, exploiting


loopholes like refund abuse, referral bonuses, or dummy gameplay to clean money.

Keeping up with new typologies of laundering requires constant regulatory and


technological upgrades.
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