The Enforcement Directorate conducted raids as part of an ongoing probe against “illegal” instant smartphone-based loans “controlled” by Chinese persons.
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How it started
The money laundering case is based on at least 18 FIRs filed by the Bengaluru Police cyber crime station.
The complaints alleged the businesses’ involvement in “extortion and harassment of the public who had availed small amount of loans through the mobile apps.”
Cashfree statement
The ED visited Bengaluru premises of online payment gateways like Razorpay, Paytm and Cashfree.
The search operation is still in progress.
A Cashfree spokesperson said that it diligently cooperated with the ED operations and provided them the required and necessary information on the same day of enquiry.
“Our operations and on-boarding processes adhere to the PMLA and KYC directions, and we will continue to do so in the time to follow,” they stated.
Seizure and findings
The agency said it has seized Rs 17 crore worth funds kept in “merchant IDs and bank accounts of these Chinese persons-controlled entities”.
Said entities were found to be doing their suspected/illegal business through various merchant IDs/accounts held with payment gateways/banks.
Modus operandi
They operate by using forged documents of Indians and make them dummy directors leading to generation of “proceeds of crime”, it alleged.
The agency said that they were generating proceeds of crime through various merchant IDs/accounts held with payment gateways/banks.
They were also not operating from the addresses given on the MCA (ministry of corporate affairs) website/registered address and they have “fake” addresses.
Smartphone brands also under scanner
ED has been conducting over half a dozen probes into tech firms this year, including Vivo, Oppo and Xiaomi.
It seized more than $1 billion of capital that it said firms had evaded in fraudulent tax computations.
Crypto companies
As recently as last week it also raided the premises of CoinSwitch, a top local crypto exchange app.
It alleged the Indian firm acquired shares of over $200 million in violation of local forex laws.
It also froze assets worth over $8 million from WazirX last month, citing suspected violation of foreign exchange rule.
Govt crackdown
The ED has been crusading against lending apps that are charging exorbitant fees and using unethical means to collect the payments back.
The RBI is expected to issue new guidelines for digital lending that will mandate firms to provide more disclosure and transparency as well as restrict several business practices.
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