Chinese loan app case: ED raids premises of Paytm, Cashfree and Razorpay

Chinese loan app case: ED raids premises of Paytm, Cashfree and Razorpay

The federal agency conducted the raids under provisions of the Prevention of Money Laundering Act (PMLA), 2002, the agency said on Saturday.

FPJ Web Desk Shankar RajUpdated: Sunday, September 04, 2022, 09:44 AM IST
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Photo: Representative/ File

Clamping down on Chinese instant loan apps known for their dubious extortion tactics, the Enforcement Directorate (ED) on Saturday raided the Bengaluru premises of online payment gateways like Razorpay, Paytm and Cashfree.

In the searches that started on Friday, the agency also seized Rs 17-crore worth funds kept in “merchant IDs and bank accounts through which these entities were running their illegal business”. Razorpay and Cashfree responded saying they were cooperating with the ED, while Paytm declined to comment.

These payment gateway firms have been in the crosshairs of the ED action since 2020 soon after the Covid19 pandemic struck.

As per the agency, the case is based on at least 18 FIRs filed by the Bengaluru police cybercrime station against “numerous entities/ persons in connection with their involvement in extortion and harassment of the public who had availed small loans.”

Themodus operandi of these entities involved using forged documents of Indians and making them dummy directors leading to generation of “proceeds of crime”. The agency also said that these app firms don’t operate from the addresses given on the MCA (Ministry of corporate affairs) website/ registered address.

The ED had initiated a probe under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of instances of gullible debtors ending their lives came to the fore from various states.

As per scores of cases filed with the police, the victims are coerced and harassed by these loan app (application) companies by publicising their personal details available in their phones and by undertaking high-handed methods to threaten them. It is alleged that the companies source all personal data of the loan-taker when they download these apps on their phones.

“Someof ourmerchantswerebeing investigated by law enforcement agencies about 18 months back. As part of the ongoing investigation, the authorities requested additional information to help with the investigation,” a Razorpay spokesperson said, adding that the firm has fully cooperated and shared KYC and other details or people involved.

Cashfree Payments said their “operations and onboarding processes adhere to the PMLA and KYC directions, and will continue to do so,” a spokesperson said.

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