ED raids Razorpay, Paytm, and Cashfree in Chinese loan app case

During the raids, the federal investigation agency said it seized Rs 17 crore in funds held in “merchant IDs and bank accounts of these Chinese persons-controlled entities.”

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On September 2, 2022, the Directorate of Enforcement (ED) conducted search operations in Bengaluru in accordance with the provisions of the Prevention of Money Laundering Act (PMLA), 2002.

According to the report, a search operation is being conducted on online payment processors like Razorpay, Paytm, and Cashfree as part of an ongoing investigation into “illegal” instant loans made using smartphones that are “controlled” by Chinese people.

These entities’ business model is to use forged Indian documents to create dummy directors, thereby generating crime proceeds. It stated that these entities are controlled/operated by Chinese individuals.

The search operation has included the premises of Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd, and entities controlled/operated by Chinese persons, the ED said. It has been discovered that the aforementioned entities were conducting suspicious/illegal business through various merchant IDs/accounts with payment gateways/banks.

During the raid, the Federal Investigation Agency mentioned it seized money worth Rs 17 crore held in trader IDs and bank accounts of entities controlled by these Chinese individuals.

According to the agency, the entities under investigation were receiving proceeds of crime through various merchant IDs and accounts held with banks and payment gateways, as well as from registered MCA (Ministry of Corporate Affairs) addresses that were not valid and had “fake” addresses.

The Bengaluru Police Cyber Crime Station filed at least 18 FIRs against “multiple entities/individuals for extortion and harassment of public taking loans of small amount through mobiles,” citing the ED. It also claimed that these are the foundation of its money laundering case.