India’s financial crime agency searched the offices of fintech unicorns Paytm and Razorpay as well as Cashfree on Friday as part of an ongoing probe into fraudulent Chinese loan apps, it said on Saturday, the latest in a series of probes in recent months. The Enforcement Directorate said its probe into major Indian firms and businesses controlled by Chinese personnel was prompted by 18 complaints lodged with the Cybercrime Police in Bengaluru. The complaints alleged that the businesses were involved in “extorting and harassing the public who availed small amounts of loans through mobile applications”.
“During the investigation, it became clear that these entities are controlled/operated by Chinese persons. The modus operandi of these entities is to use forged documents of Indians and make them fictitious directors of these entities, generate proceeds of crime,” the agency said in a statement (PDF). “It was found that the said entities were conducting their suspicious/illegal trades through various merchant IDs/accounts maintained with payment gateways/banks,” the agency added.
Entities operated by Chinese personnel generated “criminal proceeds through merchant IDs/accounts held with payment gateways/banks,” the agency said. There were discrepancies in the addresses where they operated and what they reported to the local authority, the agency said. The agency said it had seized $2.13 million from entities controlled by Chinese personnel and that its searches were continuing. The government agency has this year carried out more than half a dozen probes into tech firms, including Chinese smartphone vendors Vivo, Oppo and Xiaomi, and seized more than $1 billion in capital it said the firms evaded by fraudulently calculating taxes.
Last week, it also searched the premises of CoinSwitch, a top local crypto exchange backed by Andreessen Horowitz, alleging that the Indian firm acquired more than $200 million worth of shares in violation of local forex laws, TechCrunch previously reported. The Enforcement Directorate also froze over $8 million worth of assets from WazirX last month, citing suspected foreign exchange violations, and $46 million from local entity Vauld for facilitating the “crime” of proceeds from predatory lending firms. Indian authorities are cracking down on lending apps that charge exorbitant fees and use unethical means to collect payments back. India’s central bank is moving ahead with new digital lending guidelines that will direct firms to provide more information and transparency to benefit consumers and curb several business practices.
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