Chinese loan app case: ED files charges against Razorpay, fintech firms, NBFCs on money laundering allegations
The Enforcement Directorate said on Friday it has filed charges against payment gateway Razorpay, three fintech companies controlled by Chinese nationals and as many NBFCs and some others in a money-laundering case linked to Chinese loan apps that allegedly defrauded many people.
The federal investigation agency said in a statement that the special Prevention of Money Laundering Act (PMLA) based in Bengaluru has taken cognizance of the prosecution’s complaint (charge).
A total of seven entities and five people are named as accused in the indictment.
The charged entities include fintech companies Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited which are “controlled” by Chinese nationals and three non-banking financial companies (NBFCs) registered with the RBI called X10 Financial Services Private Limited, Track Fin-ed Private Limited and Jamnadas Morarjee Finance Private Limited.
Payment gateway Razorpay Software Private Limited has also been named in the charge sheet as an accused, the investigating agency said.
Razorpay sources said the payment gateway has been a “facilitator” in the investigation against suspicious Chinese companies.
The platform has blocked all the suspicious entities and funds associated with them about one-and-a-half years ago and has shared their details with the ED on several occasions, Razorpay sources said.
As a regulated financial institution, Razorpay cooperates with law enforcement agencies and provides necessary merchant information to assist in the investigative process, they said.
The money laundering case by the ED stems from several FIRs by the Bengaluru Police CID that were filed based on complaints received from various customers who had availed loans and “faced harassment” from the recovery agent of these money lending companies.
According to the ED, the probe found that fintech companies had “agreement with respective NBFCs for disbursement of loans through digital lending apps”.
“The money lending business was actually being run illegally by these fintech companies and these NBFCs knowingly allowed these firms to use their names to get commission without being careful about their conduct. The same is also a violation of the Fair Practices Guidelines of the Reserve Bank of India,” the agency said.
The agency had previously issued two temporary freeze orders ₹Funds worth Rs 77.25 crore kept in bank accounts and payment gateways, which was later confirmed by the adjudicating authority of PMLA.
