In fresh trouble for fintech companies with links to Chinese nationals, the Enforcement Directorate (ED) has provisionally attached their assets worth Rs 6.17 crore held in various bank accounts and merchant IDs.
The central agency took the action under the Prevention of Money Laundering Act following registration of two separate FIRs at the city’s Marathahalli and Mahalakshmi Layout police stations in November last year. The Central Crime Branch (CCB) has already made two arrests in the case.
According to the ED, the fintech companies were incorporated during the pandemic with Indian citizens as their directors and one common registered office. After the registration, the companies received Foreign Direct Investment (FDI) from China and partnered with local non-banking financial companies (NBFCs). The next step was to launch mobile phone apps, namely Cash Master, Krazy Rupee, Cashin and Rupee Menu, that offered instant short-term loans with little or no documentation.
Many Indians, mostly jobless youths looking for quick cash, applied for the loans without reading the fine print. Once they signed up, the fintech companies charged them exorbitantly high processing fees and interest rates. Those who couldn’t pay up were shamed before friends and relatives as the companies had accessed their phone contacts.
While the companies had Indian citizens as directors and shareholders, the bank accounts were operated by Chinese nationals. The bulk of these funds was remitted abroad, according to the ED.
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