The Indian government has formally justified its decision to ban online money games, presenting a stark warning to the Supreme Court about the sector's potential connections to serious national security threats. In a significant affidavit filed on Tuesday, the Centre revealed that the unregulated online gaming industry has been linked to terror financing and money laundering activities.
National Security at the Core of the Ban
The Centre informed the Supreme Court that the Promotion and Regulation of Online Gaming Act was specifically designed to protect citizens, particularly the youth and vulnerable populations, from the damaging social, economic, and psychological impacts of online money games. More critically, the legislation aims to safeguard the country's financial systems and ensure national security and sovereignty remain intact.
In its detailed submission, the government stated that the unchecked expansion of online money gaming has been directly connected to financial fraud, money laundering, tax evasion, and in certain instances, the financing of terrorism. This connection, the affidavit argues, establishes a clear threat to national security, public order, and the integrity of the state.
Classified Data Reveals Opaque Financial Flows
The government's affidavit contained alarming details about how these platforms are allegedly being misused. An analysis of data from Suspicious Transaction Reports and Cross Border Wire Transfer Reports uncovered a concerning pattern where online gaming companies registered in small island nations maintained user accounts with Indian banks under proxy names.
According to the government's findings, money collected from Indian users was subsequently remitted out of the country by misdeclaring the purposes of these financial transfers. While the specific data pertaining to money laundering and terror financing links remains classified, the Centre agreed to submit this sensitive information to the Supreme Court in a sealed cover for confidential review.
Legal Challenges and Government's Stance
The affidavit was submitted in response to multiple petitions challenging the validity of the new online gaming law. Despite these legal challenges, the Centre maintained that it is premature to examine the law's validity since the legislation has not yet been formally notified after receiving the President's assent.
The government firmly asserted that Parliament holds exclusive competence to regulate this sector, emphasizing that there is substantial material and data indicating the unregulated online gaming sector's connections with terror financing and money laundering. This position reinforces the Centre's argument for comprehensive federal oversight rather than piecemeal state-level regulations.
This development marks a crucial moment in India's ongoing effort to balance technological innovation with national security concerns, potentially setting important precedents for how the country regulates digital industries with significant financial and security implications.
