The Enforcement Directorate (ED) on Friday said it has frozen fresh deposits worth Rs 78 crore following searches at the premises of payment gateway company 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 carried out at five premises in Bengaluru on October 19, the ED said.
Razorpay said it cooperated with the agency and its funds were not seized.
“We would like to clarify that this recent visit by ED is part of the ongoing investigation against a few suspicious entities who conducted illegal business through multiple payment gateways/banks. We proactively blocked all those suspicious entities and funds associated with them about 1.5 years ago, and we have shared their details with ED multiple times,” a Razorpay spokesperson said.
“Being a regulated financial institution, we routinely cooperate with law enforcement agencies and provide necessary merchant information to assist in the investigation process. No funds from Razorpay were frozen as part of these visits. We would like to reiterate that all our operations and onboarding processes adhere to the highest standards of governance and regulatory guidelines,” they added.
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The money laundering case stems from 18 FIRs filed 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 availed small amounts of loans through the mobile apps being run by them.
“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,” the ED said.
These entities were generating “proceeds of crime” through various merchant IDs/accounts held with payment gateways and banks and they have submitted fake addresses in KYC documents.
“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 said.
The agency had earlier seized deposits worth Rs 17 crore in the case.
It said fresh searches were carried out at the premises of Razorpay Pvt Ltd and the compliance offices of some of the banks.
These payment gateway firms have been in the ED’s crosshairs since 2020, soon after the COVID-19 outbreak started in the country.
The ED initiated 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 in various states came to the fore, with the police stating they were being coerced and harassed by these loan app (application) companies by publicising their personal details available in their phones and using high-handed methods to threaten them.
It was alleged that the companies sourced 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 routed through these payment gateways.
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