India’s financial crime agency on Friday searched the offices of fintech unicorns Paytm and Razorpay and Cashfree as part of an ongoing investigation into fraudulent Chinese loan apps, it said on Saturday, the latest in a series of investigations over the past few months. .
The enforcement directorate said its searches of leading Indian companies and companies controlled by Chinese personnel were prompted by 18 complaints filed with the cybercrime police in Bengaluru. The complaints alleged that the companies were involved in “extortion and intimidation of the public who had borrowed a small amount through the mobile apps”.
“Investigation has revealed that these entities are controlled/operated by Chinese individuals. The modus operandi of these entities is by using forged documents of Indians and making them as dummy directors of those entities, they generate proceeds of crime,” the agency said. said in a statement (PDF).
“It has been noticed that the entities mentioned were conducting their suspected/illegal business through different merchant IDs/accounts at payment gateways/banks,” the agency added.
The entities managed by Chinese staff generated “crime proceeds through merchant IDs/accounts at payment gateways/banks,” the agency said. There were discrepancies in the addresses where they operated and what they disclosed to the local government, the agency said.
The agency said it seized $2.13 million from entities controlled by Chinese personnel and searches are ongoing.
The government agency has conducted more than half a dozen investigations this year at tech companies, including Chinese smartphone vendors Vivo, Oppo and Xiaomi, and seized more than $1 billion in capital it claims had evaded companies in fraudulent tax calculations.
Last week, it also searched the premises of CoinSwitch, a leading local crypto exchange backed by Andreessen Horowitz, alleging that the Indian company had acquired shares of more than $200 million in violation of local forex laws, londonbusinessblog.com previously reported.
The Enforcement Directorate also last month froze assets worth more than $8 million from WazirX, citing suspected foreign exchange rule violations, and $46 million from Vauld’s local entity for facilitating “crime-derived” proceeds from predatory lenders.
Indian authorities are cracking down on lending apps that charge exorbitant fees and use unethical means to collect payments. India’s central bank is moving forward with new digital lending guidelines that will require companies to provide greater disclosure and transparency for the benefit of consumers, as well as restrict various business practices.
Google said last month that it has blocked more than 2,000 unethical lending apps in India this year.