The Enforcement Directorate has raided six premises in Bengaluru, including of Razorpay Pvt Ltd, Cashfree Payments, and Paytm Payment Services Ltd, following allegations that people were fleeced after taking loans through apps controlled by Chinese nationals.

The searches, which started the previous day, continued till Saturday, gathering evidence for proceeds of crime under the Prevention of Money Laundering Act (PMLA), 2002. An amount of ₹17 crore has been seized from merchant IDs and bank accounts of entities controlled by the suspected Chinese nationals, said the ED on Saturday.

During inquiries, said the ED, it has emerged that these entities are either controlled or operated by Chinese nationals. The Chinese firms are alleged to have developed lending money mobile apps, including Krazy Rupees and Cash Master, and entered into agreements with non-banking financial institutions. The firms would offer loans at exorbitant rates and charge disproportionate processing fees for giving loans to gullible persons.

Companies respond

Commenting on the development, a spokesperson of Razorpay said a few Chinese lenders were being investigated by law enforcement about a year and a half back. “As part of the ongoing investigation, the authorities requested additional information to help with the investigation. We have fully cooperated and shared KYC and other details. The authorities were satisfied with our due diligence process.,” added the spokesperson.

A spokesperson of Cashfree Payments said, “We extended our diligent co-operation to the ED operations, providing 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 will continue to do so.”

Paytm spokesperson said, “We are supporting law enforcement agencies, who are investigating a specific set of merchants. The authorities reached out to us with directions to provide certain information about these merchants under scrutiny, to which we promptly responded. We continue to cooperate with the authorities and remain fully compliant.”

Illegal means

The modus operandi adopted by these Chinese nationals was to use forged documents of Indians and make them dummy directors of entities. They were generating money through illegal means, attracting provisions of the PMLA. “It has come to notice that the said entities were doing their suspected/illegal business through various Merchant IDs/Accounts held with Payment Gateways/banks. The premises of Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd, and entities controlled/operated by Chinese persons are covered in the search operation,” the ED said in a statement.

During the search operations, it was found that the entities were generating proceeds of crime through various Merchant IDs/Accounts held with Payment Gateways and banks. They were also not operating from the addresses given on the MCA website/registered address, the ED informed. The sleuths suspect the addresses are fake.

The ED had taken the case from the Cyber Crime Police Station, Bengaluru, which had registered 18 FIRs last year against several persons and companies to investigate charges that people were cheated after availing small amounts of loans through mobile apps run by the Chinese. The Bengaluru police had also arrested a few involved in the case. 

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