ED conducts new searches in Chinese loan money laundering case


The Law Enforcement Branch on Wednesday carried out new raids against some payment gateways and others as part of its ongoing investigation into money laundering related to alleged financial irregularities by loan companies based on “Chinese-controlled” instant apps, official sources said.

They said premises linked to some payment gateway operators, some companies engaged in these lending app transactions and operators in about three states were being raided.

A Paytm spokesperson said the action was related to the same case the agency began researching earlier this month.

“As we mentioned earlier, ED continues to seek certain merchant information from various payment service providers, we have shared the required information,” Paytm said.

The federal agency on September 2 raided the Bengaluru premises of payment gateways like Paytm, Razorpay and Cashfree as part of the investigation.

During the raids, he then said that funds worth 17 crore rupees kept in merchant IDs and bank accounts of these Chinese-controlled entities were seized.

Finance Minister Nirmala Sitharaman had also discussed various issues related to illegal loan applications during a meeting of senior officials of the ministry and RBI held on September 8 and decided to take a series of measures to check the functioning of these apps.

These payment gateway companies have been in the crosshairs of ED action since 2020 shortly after the outbreak of the COVID-19 pandemic in the country.

The ED has launched an investigation under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of cases of gullible debtors ending their lives emerged in various states, police stating that they were coerced and harassed by them. lending application (app) companies by releasing their personal data available on their phones and adopting authoritarian methods.

It has been alleged that the companies obtained all of the loan taker’s personal data when downloading these apps to their phones, even though their interest rates were “usurious”.

The agency had said the alleged proceeds of crime in the case were routed through these payment gateways. Speaking about the case, the ED said the “modus operandi” of these entities was that they used false documents of Indians and turned them into bogus directors leading to the generation of “proceeds of crime”.

“These entities are controlled/operated by Chinese people.” “The said entities were found to be doing their suspicious/illegal activities through various merchant IDs/accounts held with payment gateways/banks,” the ED said.

It had said that “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 entities under investigation were generating proceeds of crime through various merchant IDs/accounts held with payment gateways/banks nor do they operate from the addresses given on the website/registered address of the MCA (Ministry of Commercial Affairs), the agency said.

The ED probe discovered that these companies had “fake” addresses. 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.


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