The Enforcement Directorate (ED) in India has provisionally attached movable assets worth INR 106 crore belonging to several lending app operators under the provisions of the Prevention of Money Laundering Act, 2002. The amount seized was parked with various Indian fintech startups and banks, including Razorpay, Cashfree, Paytm, PayU, and Easebuzz. The action was taken after an investigation into an FIR lodged at the Cyber Crime Police Station in Bengaluru involving multiple Chinese entities and nationals for alleged extortion and harassment of people who had availed loans through loan apps controlled by these foreign citizens.
Many of these entities floated companies by appointing dummy directors on behalf of Chinese nationals, who allegedly obtained the KYC details of many Indian nationals and appointed locals as directors of these firms without their consent. These entities would then provide instant loans through their apps to availing customers and would charge exorbitant interest rates and high processing fees. The firms would then employ predatory tactics to recover the loan amounts, which included threats and even contacting family members and friends of borrowers to ask for money. The recent action has come a week after the ED filed a chargesheet against multiple individuals and entities, including fintech unicorn Razorpay, in connection with a money laundering probe involving illegal Chinese loan apps.