ED Local Raids from Razorpay, Paytm, Cashfree
New Delhi/Bengaluru: The Law Enforcement (ED) Directorate said on Saturday September 3 that it had conducted raids on the premises of online payment gateways such as Razorpay, Paytm and Cashfree in Bangalore in connection with a case money laundering against certain instant loan distribution entities based on “monitored” applications. by Chinese people.
The search that began on Friday as part of an ongoing investigation is still ongoing, the agency said Saturday evening.
The Federal Investigative Agency also said that during the raids, it seized funds worth Rs 17 crore kept in “trader IDs and bank accounts of these entities controlled by Chinese persons”.
All three companies responded by saying they were cooperating with the federal agency.
A Paytm spokesperson said they are “supporting law enforcement, which is investigating a specific set of merchants.”
“The authorities asked us to provide certain information about these traders under surveillance, to which we quickly responded. We continue to cooperate with authorities and remain fully compliant,” Paytm said.
Razorpay said some of their merchants were “investigated by law enforcement about a year and a half ago. As part of the ongoing investigation, the authorities have requested additional information to facilitate the investigation.
“We cooperated fully and shared KYC and other details. Authorities were satisfied with our due diligence process,” the spokesperson said.
Cashfree Payments said its “operations and onboarding processes adhere to PMLA and KYC guidelines, and we will continue to do so.”
“We have extended our diligent cooperation to ED operations, providing them with the required and necessary information on the same day of the investigation,” the spokesperson added.
These payment gateway companies have been in the crosshairs of ED action since 2020 shortly after the outbreak of the COVID-19 pandemic in the country.
The ED has launched an investigation under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of cases of gullible debtors ending their lives were reported in various states.
Police said victims were coerced and harassed by lending application (app) companies into posting their personal information available on their phones and adopting high-handed ways to threaten them.
It has been alleged that the companies obtained all of the loan taker’s personal data when downloading these apps to their phones, even though their interest rates were “usurious”.
The agency had said the alleged proceeds of crime in the case were routed through these payment gateways.
Speaking about the case in question, the ED said the “modus operandi” of these entities was that they used false documents of Indians and turned them into bogus directors leading to the generation of “proceeds of crime”.
“These entities are controlled/operated by Chinese people.
“The said entities were found to be doing their suspicious/illegal activities through various merchant IDs/accounts held with payment gateways/banks,” the ED said.
It said “the premises of Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd and Chinese controlled/operated entities are covered by the search operation.”
The entities under investigation were generating proceeds of crime through various merchant IDs/accounts held with payment gateways/banks nor do they operate from the addresses given on the website/registered address of the MCA (Ministry of Commercial Affairs), the agency said.
The ED probe discovered that these companies had “fake” addresses.
The ED said this money laundering case was based on at least 18 FIRs filed by the Bengaluru Police Cybercrime Station against “numerous entities/persons in relation to their involvement in extortion and harassment of the public who had benefited from a small amount of loans via the mobile applications managed by these entities/persons.