BENGALURU: The Directorate of Enforcement (ED) has provisionally attached assets worth Rs 6.17 crore of various fintech (financial technology) companies under the Prevention of Money Laundering Act (PMLA), 2002 in a case of giving mobile app-based loans to gullible Indians during the Covid pandemic-led economic crisis.
The ED had initiated the investigation on the basis of two separate FIRs registered by the Marathahalli and Mahalakshmipuram police stations in Bengaluru under various sections of the Indian Penal Code (IPC), stated the Central enforcement agency in an official communication on Wednesday.
The investigation revealed that “the accused along with some Chinese nationals opened various companies in the name of various persons for the purpose of illegal transactions, issuing loans and raising investments through mobile apps, like Cash Master, Krazy Rupee, Cashin, Rupee Menu etc,” the Central agency said.
Explaining the modus operandi used by the fraudsters the ED stated, “These companies were incorporated during Covid at common addresses by active involvement of some Chinese nationals in connivance with certain Indian chartered accountants, who helped by using Know Your Customer (KYC) documents of young Indian nationals in need of money, who were made directors/shareholders in these companies,” stated the ED. The fintech firms utilised their own funds received from abroad, mainly from China, to issue short-term loans through non-banking financial companies (NBFCs), the agency added.
The account numbers/payment gateways opened on the basis of KYC documents of these Indian nationals were utilised to provide the loans, and “high processing fees and usurious interest rates” were charged, the ED said. The companies also adopted unethical measures to recover the loan amount and high interest rates.