‘OctaFX used fake e-comm firms to disguise funds’

Over $4.2 million siphoned abroad under guise of fake imports of services to accused entities: ED

- Abhishek Sharan

The Enforcement Directorate’s (ED's) 800-crore money-laundering investigation into unauthorised foreign-exchange trading platform OctaFX and its associates has revealed that it allegedly used the services of fintech professionals to create mule bank accounts and linked them with fake e-commerce websites to gain access to payment gateways so that it could disguise investor's funds as payments towards online purchases, according to officials aware of the developments.

The funds were then allegedly routed abroad towards payments for nonexistent imports and freight services, officials said. The agency's probe also revealed that 16 such fake e-commerce firms were allegedly set up in Kerala’s Ernakulam district, their offices crammed in two modest buildings, after obtaining the documents of a few unsuspecting locals through manipulation, officials added.

“ED's investigation revealed that OctaFX, which was not authorised by the Reserve Bank of India (RBI) to deal in foreign exchange in the country, had allegedly laundered funds by gathering investor money through the mule accounts in the names of fake e-commerce firms,” an ED official said. “The funds were routed through unauthorised payment aggregators and escrow accounts, adding layers to obscure ownership and transaction purpose,” the official added.

According to the ED, a Russian national identified as Pavel Prozorov is the mastermind behind OctaFX’s operations in India. He is among 54 people and entities, including the 16 fake e-commerce firms and associated entities, named as the accused in two charge sheets the agency has submitted to a court in Mumbai between October and December last year.

The OctaFX app and website allegedly operated in India via its local arm, OctaFX India Pvt Ltd. According to ED's charge sheets, OctaFX India Pvt Ltd was directly involved in the money-laundering operations orchestrated by its onetime director and beneficial owner, Prozorov.