In a significant move aimed at strengthening oversight and curbing money laundering activities in the online gaming sector, the Indian government is progressing plans to mandate registration of online gaming platforms with the Financial Intelligence Unit-India (FIU-IND). This development, exclusively reported by CNBC-TV18, is currently under inter-ministerial consultations involving key bodies such as the Prime Minister’s Office, Ministry of Home Affairs, Department of Revenue, Ministry of Electronics and Information Technology (MeitY), Enforcement Directorate (ED), and the Central Board of Direct Taxes (CBDT).

What it means?

The proposal under consideration seeks to categorize online gaming companies as “reporting entities” under the Prevention of Money Laundering Act (PMLA), 2002. This classification would impose on them the obligation to adhere to stringent compliance measures. These measures include Know Your Customer (KYC) protocols, transaction monitoring, and the reporting of suspicious activities to FIU-IND.

Probir Roy Chowdhury, a partner at JSA Advocates and Solicitors, on the development, said, “While potentially burdensome, FIU-IND registration could play a key role in ensuring that illegal offshore betting platforms are fined and blocked—enabling the growth of the legitimate online gaming industry in India.”

By enforcing FIU-IND registration, authorities would be better equipped to monitor financial flows within the online gaming ecosystem, thereby enhancing transparency and fostering a more secure environment for legitimate businesses.

This initiative is not without precedent. It follows previous regulatory actions, such as the 2023 mandate requiring Virtual Digital Asset (VDA) service providers to register with FIU-IND. If implemented, this measure would represent another significant step in the government’s efforts to fortify financial compliance across emerging digital sectors.

Historically, similar regulatory measures have been implemented in other sectors to curb illegal activities and promote transparency. For instance, the Securities and Exchange Board of India (SEBI) has stringent regulations for stock market participants to prevent fraudulent activities. Similarly, the Reserve Bank of India (RBI) has mandated KYC norms for banks to curb money laundering.

Future of online gaming in India

The online gaming industry in India is experiencing rapid expansion, with revenues projected to reach approximately $2.7 billion in 2024. Over 155 million users are engaging in real-money gaming segments. In this context, the proposed FIU-IND registration could serve as a pivotal mechanism to ensure sustainable and lawful growth within the sector.