ED attaches Rs 6.17 crore of fintech firms under PMLA

Pramesh S Jain & Dr B Thomas (Special correspondent) 

Officials of Directorate of Enforcement (ED) on Wednesday provisionally attached assets worth Rs.6.17 crores belonging to various fintech companies under the Prevention of Money Laundering Act (PMLA), 2002.

The ED initiated money laundering investigation on the basis of two separate FIRs registered by Marathahalli Police station and Mahalakshmipuram Police Stations under various sections of IPC, 1860.

Investigation by ED revealed that the accused persons along with Chinese nationals opened various companies in the name of various persons for the purpose of illegal transactions, offering loans and raising investments through mobile Apps like Cash Master,Krazy Rupee, Cashin,Rupee Menu etc.

Notably, these companies have been incorporated during Covid time at common addresses by active involvement of some Chinese Nationals in connivance with certain Indian Chartered accountants who helped in incorporation of these companies by using KYC documents of young Indian nationals in need of money who were made Directors and shareholders in these companies.

The bank accounts of the companies were being operated and controlled by mainly the Chinese Nationals on whose instructions the said companies were incorporated.

The account numbers and payment gateways opened on the basis of KYC documents of these Indian nationals were utilised to provide loans to the public and high processing fees and usurious interest rates were charged and for the recovery of the loan amount and high interest rates, unethical ways adopted with the customers,the ED officials said in a release.

These short-term loans were provided by these fintech companies through Non-Banking Financial Companies (NBFCs).

The fintech companies utilized their own funds received from abroad (mainly from China) for the purpose of giving loans at usurious rate of interest to the unemployed youth and other vulnerable section of the society, through the NBFCs by making arrangement of security deposit of the amount equivalent to the loans granted by the NBFCs to the borrowers.

During the course of investigation,it was also revealed that these companies have layered and remitted the funds abroad.Further investigation is in progress.