CHENNAI: The Enforcement Directorate (ED) on Tuesday stated that they have arrested two Chinese nationals Xiao Ya Mao and Wu Yuanlun on November 13 from Tiruchy, under the provisions of the Prevention of Money Laundering Act (PMLA), in a case booked against digital loan apps operated by Chinese nationals that indulge in disbursing short-term, high-interest instant loans through various mobile applications.
The Sessions Court in Chennai remanded them to judicial custody till November 29, the central agency said.
ED had initiated a probe based on FIRs filed on complaints regarding loan apps that charge exorbitant rates of interest, processing fees (20%-30% of amount), and threaten borrowers who fail to repay. The probe revealed that the Chinese nationals had formed two companies — Toucolor Technologies Private Limited and Truekindle Technology Private Limited — in 2020. They had also forced two employees to become dummy directors, while they ran the entire operation from the background.
The companies were providing online short-term, instant micro loans of Rs 5,000-Rs 10,000 through mobile apps, which required borrowers to share personal and bank information and also grant access to their contact list, personal photos and videos. Borrowers were forced to take fresh loans if they couldn’t repay, pushing them into a debt trap.
Chinese nationals used identities of dummy directors for operation
A large number of people opted for those short-term loans. The tenure of loan is 7 to 15 days, with exorbitant interests. The borrowers and their kin are called up and harassed using data collected from their phones.
The company had disbursed loans of Rs 49.2 crore and recovered them by high handed methods. The ED revealed that cryptocurrency wallets and accounts by Chinese nationals were made on online platform WazirX using identities of dummy directors.
Moreover, Rs 3.54 crore was brought in via cryptocurrencies into these wallets between August and Dec 2020, and later withdrawn as cash. The amount recovered from borrowers, Rs 5.02 crore, in Indian bank accounts, was taken out via crypto wallets outside the country. Verification of IP logs revealed that crypto wallets were accessed from Hong Kong. The proceeds were siphoned off outside India, ED said.
Rs 3.54 crore brought in through crypto wallets
The ED said that cryptocurrency wallets were created by the Chinese nationals on online platform WazirX by using identities of dummy directors, and Rs 3.54 crore was brought in through these wallets between August 2020 and December 2020