Singapore shell companies allegedly implicated in India’s ₹123 crore money-laundering probe

The Enforcement Directorate (ED), under India’s Ministry of Finance, announced the freezing of assets amounting to approximately ₹123 crore (US$14.8 million) in the bank accounts of NIUM India Private Limited on 28 February.

This move is said to be part of an in-depth investigation into the company’s alleged involvement with Singapore-based shell entities in cases related to illegal online loans, gambling, and betting applications.

NIUM, originally founded in 2014 as Instarem, a consumer-remittance platform, before rebranding to its current name in 2019, is headquartered in Singapore. The company specializes in cross-border payments, facilitating transactions across various countries.

The ED’s action followed a series of search operations on 23 and 24 February 2024 under the Prevention of Money Laundering Act (PMLA), 2002.

These operations targeted 10 locations across Mumbai, Chennai, and Kochi, focusing on the premises of M/s NIUM India Pvt Ltd and its directors, as well as several other entities suspected of being part of a network used to launder money generated from illegal online activities.

The press release issued by the ED detailed how the investigation was initiated based on First Information Reports (FIRs) registered by the Kerala and Haryana Police, stemming from complaints about exploitation and cheating through online platforms.

These platforms, allegedly controlled by Chinese entities, facilitated illegal loan services, gambling, and betting activities.

According to the ED, numerous shell entities were established within India to channel funds to counterpart shell companies in Singapore.

The ED explained, “These Singapore-based shell entities issued fraudulent invoices for supposed software or other services, purportedly provided by the Indian shell entities where the proceeds of crime (PoC) had already been accumulated.”

The agency pointed out that these invoices were facilitated by the global forex settlement platform, NIUM Singapore Pte Ltd, which utilizes its Indian subsidiary, NIUM India, to collect funds from Indian entities.

These funds were then transferred to NIUM Singapore under the guise of payments for technical services, subsequently being deposited into the virtual wallets of the Singapore shell entities.

The ED highlighted that beyond these fabricated invoices, NIUM India did not obtain any additional documentation from the entities sending the money.

“Through this process, the identities of the shell entities involved in sending and receiving funds, as well as the fictitious import transactions, were obscured from banks and regulatory bodies, effectively laundering the proceeds of crime out of India,” the ED stated. Consequently, the agency has frozen approximately ₹123 crore suspected to be proceeds of crime.

In response to queries from the Straits Times about the ED’s actions, a spokesperson for NIUM emphasized the company’s commitment to strict compliance and anti-money laundering measures.

The spokesperson stated that NIUM is “cooperating fully with the ED” to address the allegations and clarify any misunderstandings about its operations in India. They further noted that the investigation targets transactions facilitated by “alleged bad actors in India” through the Indian subsidiary and is not directly related to NIUM’s operations in Singapore.

Despite the ongoing investigation, NIUM reassured its commitment to fulfilling its regulatory and contractual obligations in India and other countries where it operates, expressing hope for a swift resolution to the matter.