The Enforcement Directorate (ED) said on Wednesday that it has freezed Rs 106 crore lying in merchant IDs and bank accounts in connection with the Chinese loan app fraud case.
The ED had initiated an investigation on the basis of FIRs registered by the cyber crime police station, Bengaluru, under various sections of Karnataka Money Lenders Act, Information Technology Act, Karnataka Prohibition of Charging Exorbitant Interest Act and the Indian Penal Code against numerous entities in connection with their involvement in extortion and harassment of public who had availed small amounts of loans through mobile apps being run by entities controlled by Chinese nationals.
The ED investigation revealed the modus operandi of these entities. They were incorporated by appointing dummy directors on behalf of Chinese nationals, which used to obtain KYC documents of company staff and appoint them as directors in such entities and even opened bank accounts in their names, without their knowledge or prior consent.
"These entities were involved in criminal activities by submitting fake addresses in KYC documents and taking assistance from various professionals and other persons. They provided instant short-term loans to the public through loan apps and other means and charged high processing fees and exorbitant rates of interest.
The amounts were subsequently recovered from the public by these companies by way of threatening and causing mental torture over phone as well as by contacting their family members, relatives and friends asking for the money," the ED said.
The official said that these Chinese-controlled entities indulged in huge money laundering activities through the merchant IDs maintained with various payment gateways, such as Razorpay, Cashfree, Paytm, PayU, Easebuzz and bank accounts maintained with various banks, thereby generating proceeds of crime.