The ED has attached assets of over Rs 76 crore, including of some fintech companies "controlled" by Chinese nationals and fintech major Razorpay, as part of a money laundering probe against certain Chinese 'loan app' companies whose bullying tactics are alleged to have forced many debtors to end their lives during the stressful times of COVID-19.
The central probe agency said in a statement that its criminal investigation, under provisions of the Prevention of Money Laundering Act (PMLA), is based on multiple FIRs filed by the criminal investigation department (CID) Police in Bengaluru after they received "complaints from various customers, who had availed loans and faced harassment from the recovery agents of these money lending companies".
Numerous reports of blackmail and extortion by these "loan sharks" leading to death by suicide of gullible debtors were reported last year after the coronavirus infection and the resulting lockdown began in the country.
This is the first case of criminal attachment of assets by the ED in these instances which is probing some other cases of this nature in other states too.
The amount attached by the Enforcement Directorate (ED), the statement said, "pertains to seven companies out of which three are fintech (financial technology) companies namely 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 NBFCs (non banking financial companies) registered with RBI." The NBFCs are X10 Financial Services Private Limited, Track Fin-ed Private Limited and Jamnadas Morarjee Finance Private Limited, the ED said.
It said the fintech companies have "agreement" with respective NBFCs for disbursement of loans through digital lending apps.
"The amount attached by ED also includes an amount of fee charged by Razorpay Software Private Limited to the extent of Rs 86.44 lakh for not conducting due diligence in case of one company enrolled with it for disbursement and collection of loans," it alleged.
The total amount of properties attached as part of the latest provisional order issued under the PMLA is Rs 76.67 crore and some Indians are also under the scanner of the ED in these cases.
The agency said its probe found that Chinese loan apps "offered loans to individuals and levied usurious rate of interest and processing fees." "The loan apps through their recovery agents resorted to systematic abuse, harassment and threatening the defaulters through call centers for coercive recovery of the loans by obtaining sensitive data of the user stored on mobilephones such as contacts, photographs and using them to defame or blackmail the borrower," the ED said.
It said that the people behind these loan apps "even threatened the borrowers by sending fake legal notices to their relatives and family members." ED said this money-lending business being run by these fintech companies was illegal or "not authorised" under any law.
"These NBFCs knowingly let these fintech companies use their names for the sake of getting commission without being careful about the conduct of these fintech companies in dealing with the customers who are vulnerable section of the society and are in dire need of funds due to the prevailing pandemic (COVID-19) situation." "This is also a violation of the fair practices code of the RBI," it said.