Supreme Court Issues Notice In ED's Plea Challenging Bail To A Chinese National Accused In Money Laundering Case

The Supreme Court of India on Tuesday issued notice in Enforcement Directorate's plea challenging bail granted to a Chinese National accused in the money laundering case for allegedly running betting operations in India in a racket worth more than 1000 crores. 

A Bench comprising CJI NV Ramana, AS Bopanna and Justice Hima Kohli was hearing a special leave petition challenging Telangana High Court's order granting bail to Yan Hao, an accused in the money laundering case regarding online betting apps.

Additional Solicitor General Vikaramjeet Banerjee appeared on behalf of the Enforcement Directorate. 

The offences alleged against the accused are under Section 420 I.P.C, Section 3 of the Telangana Gaming Act and Sections 66-C and 66-D of the Information Technology Act, 2000.

The ED had launched a probe under the Prevention of Money Laundering Act (PMLA) on the basis of a police FIR filed in Hyderabad after which Yan Hao, manager of a company named Beijing Tomorrow Power Company, was arrested for allegedly organising an online betting scam.

The bail was granted by High Court considering that the petitioner has been in judicial custody since 1.0.08.2020, the petitioner had disclosed ail relevant information while in custody and the other accused had already been released on bail.

ED's Case: According to the Enforcement Directorate's case, in the year 2018, Chinese Company i.e., M/s. Beijing Tomorrow Power Company and its promoters and other directors including the present petitioner Yan Hao with the help of some Indian Chartered Accountants floated multiple Indian Companies. Initially dummy Indian Directors were used to incorporate the companies and after some time, Chinese Nationals came down to India and took directorship in these companies.

Further, some locals were hired and opened bank accounts with HSBC Bank and made accounts with online wallets namely Paytm, Cash-free, Razor-pay etc which had lack of diligent mechanisms and their not reporting of suspicious transactions to the regulatory authorities helped the accused companies to launch PAN India operations.

Accused companies floated large number of similar looking websites which were hosted through Cloudfare, USA, and these websites attracted gullible persons to become members and to place bets on various online Apps which promised attractive rewards on simple games of chance.

Further, network of agents were hired to attract new customers/members who created closed Telegram and WhatsApp based groups and attached lakhs of gullible Indians.

Hundreds of websites were created to promote online betting under the garb of e-commerce, and all websites were not activated daily and some were activated for placing bets and the information on daily active websites were shared to members using Telegram groups.

During the course of investigation, it is found that the ultimate beneficiaries of these Indian Companies are Chinese nationals and their companies. On 28.08.2020, Enforcement Directorate conducted searches at 15 locations spread across Delhi, Gurgaon, Mumbai and Pune on the companies, which were illegally  running Online Betting Apps from websites which were hosted from outside India.

Searches were also conducted and it was found that the accused companies carried out the instructions of Yan Hao and that some more Chinese persons are associated with these companies and that instructions on salaries, appointments and all other HR related work was done on the instructions from Yan Hao, and other Chinese nationals.

Case Title: The Directorate of Enforcement vs Yan Hao

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