What is the case of the Chinese loan application? Key Points About ED Raids

On September 3, the Enforcement Directorate (ED) announced that six online payment gateway sites in Bangalore had been raided due to alleged irregularities in mobile app-based loans which were “managed” by Chinese.

Which businesses were raided?

Razorpay, Paytm and Cashfree were among the businesses allegedly raided, according to ED. Paytm declined to comment, but Razorpay and Cashfree said the companies were working with government authorities.

Cashfree Payments said that “their operations and onboarding process follow PMLA and KYC guidelines, and we will continue to do so.”

“We have extended our diligent cooperation to ED operations, providing them with the required and necessary information on the same day of the investigation,” the spokesperson added.

“Some of our traders were under investigation by law enforcement about a year and a half ago. As part of the ongoing investigation, authorities have requested additional information to facilitate the investigation,” a Razorpay spokesperson said.

“We cooperated fully and shared KYC and other details. Authorities were satisfied with our due diligence process.”

Why were they raided?

Ever since the COVID-19 outbreak broke out nationwide in 2020, these payment gateway companies have been the target of ED action.

According to the ED, the companies under investigation were creating proceeds of crime through various merchant IDs/accounts kept with payment gateways/banks and not operating from the locations mentioned on the MCA (Minister of Corporate Affairs) website or head office. address. The ED investigation found that these companies had “fake” addresses.

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After several cases of gullible debtors committing suicide in various states, the ED initiated an investigation under the criminal provisions of the Prevention of Money Laundering Act (PMLA).

Even though their interest rates were ‘usurious’, it was claimed that the companies obtained all of the loan applicant’s personal information at the time these applications were downloaded to their phones.

The police claimed that these gullible debtors were coerced and harassed by these lending app companies into accessing their personal information on their phones and employing aggressive tactics to threaten them.

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The search that began on Friday as part of an ongoing investigation is still ongoing, the agency said tonight. The Federal Investigative Agency also said that during the raids it seized Funds worth 17 crore kept in “trader IDs and bank accounts of these entities controlled by Chinese persons”.

What does ED say?

The ED said this money laundering case was based on at least 18 FIRs filed by the Bengaluru Police Cybercrime Station against “numerous entities/persons in relation to their involvement in extortion and harassment of the public who had benefited from a small amount of loans via the mobile applications carried out by these entities/persons.

The ED claimed that the “modus operandi” of these entities in the present case was to create “proceeds of crime” by using false Indian identity documents as fictitious directors.

Read also : Delhi: Paytm transaction from 100 helps police arrest 3 people in robbery case

“These entities are controlled/operated by Chinese people,” the ED said. “The premises of Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd and entities controlled/operated by Chinese persons are covered by the search operation.”

“The said entities were found to be doing their suspicious/illegal activities through various merchant IDs/accounts held with payment gateways/banks,” he added.

(With PTI inputs)

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