India’s financial crime fighting agency said on Saturday that it searched the offices of fintech unicorns Paytm and RazerPay as well as Cashfree as part of an ongoing investigation into fraudulent Chinese loan apps, the latest in a series of probes in recent months.
The Enforcement Directorate said that after receiving 18 complaints to the cybercrime police in Bangalore, they conducted searches against high-profile Indian firms and businesses controlled by Chinese personnel. The complaints allege the businesses are involved in “exploiting and harassing people who have taken out small loans through mobile apps.”
“During investigation, it was found that these firms are controlled/managed by Chinese persons. The modus operandi of these companies is by using forged documents of Indians and making them dummy directors of those companies, they are generating income through crime,” the agency said in a statement (PDF).
“It has been observed that the said entities are conducting their suspicious/illegal business through various merchant IDs/accounts with payment gateways/banks,” the agency said.
Firms run by Chinese personnel “generate criminal proceeds through merchant IDs/payment gateways/accounts maintained with banks,” the agency said. The agency said there were differences in the addresses where they were working and what they had disclosed to the local authority.
The agency said it had seized $2.13 million from Chinese personnel-controlled firms and that its searches were continuing.
The government agency has conducted more than half a dozen probes into tech firms this year, including Chinese smartphone vendors Vivo, Oppo and Xiaomi, and seized more than $1 billion in capital the companies say they evaded in fraudulent tax calculations.
Last week, it also searched the premises of CoinSwitch, a top local crypto exchange backed by Andreessen Horowitz, and accused the Indian firm of acquiring over $200 million worth of shares in violation of local forex laws, Technology Flow reported earlier.
The Enforcement Directorate last month froze assets worth more than $8 million from WazirX, $46 million from local firm Wald for suspected foreign exchange rule violations and facilitating “criminally-derived” proceeds from predatory lending institutions.
Indian authorities are cracking down on lending apps that charge exorbitant fees and use unethical means to recover payments. India’s central bank is moving forward with new guidelines for digital lending that will mandate institutions to provide more disclosure and transparency to benefit consumers, as well as restrict several business practices.
Last month, Google said it had blocked 2,000 unethical lending apps in India this year.