ED said it has frozen fresh deposits worth Rs. 78 crore following raids at the premises of payment gateway Razorpay and some banks as part of an ongoing money laundering probe against the alleged illegal operations of loan apps “controlled” by Chinese nationals.
The searches were carry out at five premises in Bengaluru on 19th October 2022, the Enforcement Directorate said.
The money laundering case stems from 18 FIRs file by the cyber crime police station of Bengaluru police against numerous entities/persons for their involvement in extortion and harassment of the public who had avail small amounts of loans through the mobile apps being run by them.
ED said :
“These entities are controlled/operated by Chinese nationals. The modus operandi of these entities is to use forged documents of Indians and make them dummy directors and generate proceeds of crime.”
“It has come to notice that the said entities were doing their suspected/illegal business through various merchant IDs/accounts held with payment gateways and banks,”.
These entities were generating “proceeds of crime” through various merchant IDs/accounts held with payment gateways and banks and they have submit fake addresses in KYC documents.
ED said :
“An amount of Rs. 78 crore has been seized in merchant IDs (held in payment gateways) and bank accounts of these Chinese persons-controlled entities. The total seizure in the case now stands at Rs. 95 crore,”.
The ED had earlier seize deposits worth Rs. 17 crore in the case.
It said fresh searches were carry out at the premises of Razorpay and compliance offices of some of the banks.
These payment gateway firms have in the ED’s crosshairs since 2020, soon after the COVID-19 outbreak started in the country.
The ED initiate 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, with the police stating they were being coerced and harass by these loan app (application) companies by publicising their personal details available in their phones and using high-hand methods to threaten them.
It was allege that the companies source all personal data of the loan-takers at the time of downloading these apps on their phones, even as their interest rates were “usurious“.
The ED had said the alleged proceeds of crime in this case were route through these payment gateways.
Razorpay Says No Funds Frozen by ED Following Raids, All Operations Adhere to Regulatory Guidelines
Payments solution provider Razorpay, which was raide by the Enforcement Directorate recently, in a statement said that it has cooperate with the agency and its funds have not been frozen.
Razorpay spokesperson said :
“This recent visit by the ED is part of the ongoing investigation against a few suspicious entities who conducted illegal business through multiple payment gateways/banks,” the company said in a statement on Friday.
“We proactively blocked all those suspicious entities and funds associated with them about 1.5 years ago, and have shared their details with the ED multiple times,”.
“All our operations and onboarding processes adhere to the highest standards of governance and regulatory guidelines. No funds of Razorpay were frozen,”.
The Razorpay said that being a regulate financial institution it routinely cooperates with law enforcement agencies and provide necessary merchant information to assist in the investigation process.
The Enforcement Directorate had in mid-September said it has detect and frozen Rs. 46.67 crore kept in various bank accounts and virtual accounts of Razorpay, and three others, Easebuzz, Cashfree and Paytm after raids in connection with a Chinese loan app case.
The agency had then said a total of Rs. 33.36 crore was found with Easebuzz Private Limited, Pune, Rs. 8.21 crore with Razorpay Software Private Limited, Bangalore, Rs. 1.28 crore with Cashfree Payments India Private Limited, Bangalore and Rs. 1.11 crore with Paytm Payments Services Limited, New Delhi.
ED carry out search operations under the Prevention of Money Laundering Act (PMLA), 2002 at six business and residential premises in Delhi, Ghaziabad, Mumbai, Lucknow, Gaya and 16 other premises of banks and payment gateways branches and offices in Delhi, Gurgaon, Mumbai, Pune, Chennai, Hyderabad, Jaipur, Jodhpur and Bangalore in respect of an investigation related to the app-based token name HPZ and related entities.
The agency initiate a money laundering investigation on the basis of an FIR register on 8th October, 2021, file under various sections of the Indian Penal Code (IPC) by Cyber Crime Police Station, Kohima, Nagaland.
ED Said :
“The modus-operandi of the fraudsters was to first lure the victims to invest in the company on the pretext of doubling their investment through the app HPZ Token,”.
The HPZ Token was an App-Based Token which promise users of significant gains against investment by investing in mining machines for Bitcoin and other cryptocurrencies, said the ED.
