India’s Financial Crimes Authority raided the offices of fintech unicorns Paytm and Razorpay as well as Cashfree on Friday as part of an ongoing investigation into fraudulent Chinese lending applications. the agency is the latest in a series of investigations in recent months.
The Department of Enforcement said its searches of prominent Indian companies and businesses controlled by Chinese employees were prompted by 18 complaints filed with the Cyber Crime Police in Bengaluru. The lawsuits allege the businesses engage in “extortion and harassment of the public, who have taken advantage of a small number of loans through mobile applications.”
“During investigations, it was discovered that these entities are controlled/operated by the Chinese. The mode of operation of these entities is to use forged documents of Indians and make them fake directors of those entities, they are generating proceeds of crime,” the agency said. said in a statement (PDF).
The agency added: “We found that the aforementioned entities carried out their suspected/illegal business through various merchant IDs/accounts held with payment gateway/bank,” the agency added.
The agency said that entities run by Chinese employees generated “criminal proceeds through merchant IDs/accounts with payment gateways/banks”. The agency said there are differences in the address of where it operates and what it has disclosed to local authorities.
The agency said it has seized $2.13 million worth of funds from entities controlled by Chinese personnel and searches are continuing.
The government agency has carried out more than half a dozen investigations into tech companies this year, including Chinese smartphone vendors Vivo, Oppo and Xiaomi and seized more than 1 billion dollars capital that they believe companies have evaded in fraudulent tax calculations.
Last week, it was also searched the base of CoinSwitcha leading local crypto exchange backed by Andreessen Horowitz and accused the Indian company of buying back more than $200 million worth of shares in violation of local foreign exchange laws, TechCrunch has reported. before.
The Directorate General of Enforcement also froze over $8 million worth of assets from WazirX last month, citing a suspected violation of foreign exchange rules, and $46 million from Vauld’s local entity for facilitating sue for proceeds from predatory lending companies.
Indian authorities are cracking down on loan apps that charge exorbitant fees and use unethical means to recover payments. The central bank of India is Go ahead with new guidelines for digital lending that would require companies to provide more disclosure and transparency to benefit consumers as well as restrict some business activities.
Google said last month that it has blocked more than 2,000 unethical loan applications in India this year.