ED searches fintech firms in loan app case

The agency seizes ₹17 crore kept in Merchant IDs and accounts of entities that ran the apps

Updated - September 04, 2022 12:12 am IST

Published - September 03, 2022 03:04 pm IST - NEW DELHI

The firms are also accused of making Indian nationals dummy directors. 

The firms are also accused of making Indian nationals dummy directors.  | Photo Credit: Getty Images/iStockphoto

The Enforcement Directorate conducted searches at six Bengaluru locations linked to Razorpay Private Limited, Cashfree Payments, Paytm Payment Services Limited and entities controlled or operated by the suspects based in China, in connection with the micro-loan App case.

The agency has also seized ₹17 crore kept in the Merchant IDs and bank accounts of the entities that ran the Apps.

The investigation is based on 18 First Information Reports registered by the cyber crime police in Bengaluru City against a large number of entities and individuals for their alleged involvement in the extortion and harassment of those who had taken small loans through the mobile Apps run by them.

The agency alleges that these entities were controlled or operated by the suspects based in China. They used forged documents of Indian nationals and made them dummy directors.

“It has come to notice that the said entities were doing their suspected illegal business through various Merchant IDs/accounts held with payment gateways/banks. The premises of Razorpay Private Limited, Cashfree Payments, Paytm Payment Services Limited and entities controlled/operated by Chinese persons are covered in the search operation,” said the agency.

A Razorpay spokesperson said: “Some of our merchants were being investigated by law enforcement about a year and a half back. As part of the ongoing investigation, the authorities requested additional information to help with the investigation. We have fully cooperated and shared KYC and other details. The authorities were satisfied by our due diligence process.”

During the searches, the ED found that the entities were allegedly generating proceeds of crime through the Merchant IDs/accounts and that they were also not operating from the addresses given on the Ministry of Corporate Affairs’ website. The accused had supplied fake addresses to the authorities concerned, according to the agency.

In a statement, Cashfree Payments’ spokesperson said: “We extended our diligent co-operation to the ED operations, providing them the required and necessary information on the same day of enquiry. Our operations and on-boarding processes adhere to the PMLA [Prevention of Money Laundering Act] and KYC directions, and we will continue to do so.”

Responding to the development, the Paytm spokesperson said the company was supporting the law enforcement agencies who were investigating a specific set of merchants. “The authorities reached out to us with directions to provide certain information about these merchants under scrutiny, to which we promptly responded. We continue to cooperate with the authorities and remain fully compliant,” said the spokesperson.

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