Indian agency seeks fintech Paytm, Razorpay and Cashfree offices in Chinese lending apps
India’s financial crime agency raided the offices of fintech unicorns Paytm and Razorpay as well as Cashfree on Friday as part of an ongoing investigation into fake Chinese lending apps, it said on Saturday, the latest in a series of probes in recent months.
The Enforcement Directorate said its search of high-profile Indian firms and businesses controlled by Chinese personnel was prompted by 18 complaints to the Cyber Crime Police in Bengaluru. The complaints alleged the businesses’ involvement in “extortion and harassment of the public who had availed small amounts of loans through the mobile apps.”
“During investigations, it has been found that these entities are controlled/operated by Chinese persons. The method of these entities is by using forged documents of Indians and making them dummy directors of these entities, they generate proceeds of crime,” the agency said in a statement (PDF).
“It has come to notice that the said entities were conducting their suspicious/illegal business through various merchant IDs/accounts with payment gateways/banks,” the agency added.
The devices operated by Chinese personnel generated “proceeds of crime through merchant IDs/accounts with payment gateways/banks,” the agency said. There were discrepancies in the addresses where they operated and what they had disclosed to the local authority, the agency said.
The agency said it seized an amount of $2.13 million from Chinese personnel-controlled entities and searches are ongoing.
The government agency has conducted more than half a dozen investigations into tech firms this year, including Chinese smartphone makers Vivo, Oppo and Xiaomi and seized more than $1 billion in capital it said the firms evaded in fraudulent tax calculations.
Last week, it also searched the premises of CoinSwitch, a top local crypto exchange backed by Andreessen Horowitz and alleged that the Indian firm bought over $200 million worth of shares in violation of local currency laws, TechCrunch previously reported.
The enforcement agency also froze assets worth more than $8 million from WazirX last month, citing suspected violations of foreign exchange rules, and $46 million from local unit Vauld for facilitating “criminally derived” proceeds from predatory lending firms.
Indian authorities are cracking down on lending apps that charge exorbitant fees and use unethical means to recover payments. India’s central bank is moving forward with new digital lending guidelines that will mandate firms to provide more transparency and openness for the benefit of consumers, as well as restrict more business practices.
Google said last month that it has blocked over 2,000 unethical lending apps in India this year.
