ED Attaches Assets of Fintech Companies Worth Rs 6.17 Crores Under PMLA 

Under the Prevention of Money Laundering Act (PMLA), 2002, the Directorate of Enforcement (ED) has provisionally attached assets worth Rs. 6.17 crore held in various accounts/merchant IDs held in the names of various fintech companies/associated persons maintained with various banks/payment gateways.

The ED launched an inquiry into money laundering based on two different FIRs filed by the Marathahalli Police Station and the Mahalakshmipuram Police Station in Bengaluru, respectively, under various sections of the IPC, 1860.

The defendants, along with Chinese nationals, formed numerous organizations in the names of various people for the purpose of unlawful activities, giving loans, and raising investments through mobile apps such as Cash Master, Krazy Rupee, Cashin, Rupee Menu, and others, according to the ED investigation. Notably, these companies were formed at common addresses during the Covid period with the active participation of some Chinese nationals in collusion with certain Indian chartered accountants who assisted in the formation of these companies by utilizing KYC documents of young Indian nationals in need of money who were made Directors/shareholders in these companies. The bank accounts of the corporations were mostly operated/controlled by Chinese nationals who incorporated the companies on their orders. The account numbers/payment gateways opened on the basis of these Indian nationals’ KYC documents were used to give loans to the public, with excessive processing costs and usurious interest rates levied, and unethical methods used to reclaim the loan amount and high interest rates. These fintech startups used Nonbanking Financial Companies to provide these short-term loans (NBFCs). The fintech companies used their own funds received from abroad (primarily from China) to provide loans at usurious interest rates to unemployed youth and other vulnerable members of society through NBFCs, in exchange for a security deposit equal to the amount of the loans granted by the NBFCs to the borrowers. During the examination, it was also discovered that these firms had stacked and sent monies to other countries.

Further investigation is in progress.