ED attaches bank accounts of fintech companies operating for Chinese nationals

Officials of Directorate of Enforcement (ED) on Wednesday provisionally attached assets worth ₹6.17 crore belonging to various fintech companies under the Prevention of Money Laundering Act (PMLA), 2002. 

The ED initiated money laundering investigations on the basis of two separate FIRs registered by the Marathahalli police station and the Mahalakshmipuram police station under various sections of IPC, 1860. 

Investigation revealed that the accused persons, along with Chinese nationals, opened various companies in the name of several various persons for the purpose of illegal transactions, offering loans, and raising investments through mobile apps like Cash Master, Krazy Rupee, Cashin, Rupee Menu etc.

“Notably, these companies have been incorporated during COVID-19 time at common addresses by active involvement of some Chinese nationals in connivance with certain Indian chartered accountants who helped in incorporation of these companies by using KYC documents of young Indian nationals in need of money, who were made directors and shareholders in these companies,” an ED release said. 

The bank accounts of the companies were being operated and controlled by mainly the Chinese nationals, on whose instructions the said companies were incorporated, the release added. 

“The account numbers and payment gateways opened on the basis of KYC documents of these Indian nationals were utilised to provide loans to the public and high processing fees and usurious interest rates were charged and for the recovery of the loan amount and high interest rates, unethical ways adopted with the customers,” it said.

These short-term loans were provided by these fintech companies through Non-Banking Financial Companies (NBFCs). The fintech companies utilised their own funds received from abroad (mainly from China) for the purpose of giving loans at usurious rate of interest to unemployed youth and other vulnerable sections of society through the NBFCs by making arrangement of security deposit of the amount equivalent to the loans granted by the NBFCs to the borrowers. During the course of investigation, it was also revealed that these companies have layered and remitted the funds abroad, the ED said, adding that further investigation is in progress.