BENGALURU & NEW DELHI: The Directorate of Enforcement (ED) carried out raids at premises of payment gateways -- Paytm, Razorpay and Cashfree -- on Saturday in connection with an ongoing probe against illegal Chinese loan apps.
It is alleged that these apps have been mushrooming in India, duping lakhs of youth which has led to major economic and social consequences, including many victims committing suicide.
The Central probe agency carried out searches on six premises in Bengaluru, including those belonging to the three fintech firms -- Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd -- and entities controlled and operated by Chinese-origin promoters.
The agency said Rs 17 crore kept in “merchant IDs and bank accounts of Chinese persons-controlled entities” has been seized during the raids. The search operations are underway and the raids were carried out under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, the agency added.
As many as 18 FIRs have been filed by the Cyber Crime Police Station, Bengaluru City, against numerous entities and persons in connection with their alleged involvement in extortion and harassment of the public who had availed small amounts of loans through mobile apps.
During the probe, it emerged that these entities are controlled and operated by Chinese people. Explaining their modus operandi, the agency said these entities used forged documents of Indians and made them dummy directors.
The entities were generating proceeds of crime through various merchant IDs and accounts held with payment gateways or banks. They are also not operating from the addresses given on the Ministry of Corporate Affairs website.
The companies, allegedly backed by Chinese nationals, were incorporated during the Covid pandemic in 2020 with the help of chartered accountants. Earlier this year, a working group set up by the RBI found that 600 illegal lending apps existed between January 1, 2021, and February 28, 2021.
Reacting to the raids, Cashfree Payments’ spokesperson said, “We extended our diligent cooperation to the ED operations, providing them with the required and necessary information on the same day of enquiry.
Our operations and onboarding processes adhere to the PMLA and KYC directions, and we will continue to do so.”Paytm spokesperson said, “We are supporting law enforcement agencies, which are investigating a specific set of merchants.”