India’s financial crime-fighting agency reported on Saturday that it had raided the offices of fintech unicorns Paytm and Razorpay as well as Cashfree on Friday as part of an investigation into fraudulent Chinese lending apps.
The Enforcement Directorate said its search for businesses controlled by prominent Indian companies and Chinese workers was prompted by 18 complaints filed with the Cybercrime Police in Bengaluru. The complaints said that the businesses involved were “engaged in robbing and harassing the public who availed small amount of loans through the mobile application”.
“During inquiries, these entities are controlled by the Chinese. The operation of these entities is to generate criminal income by using fake documents of Indians and making them directors of those entities,” the agency said in a statement (PDF).
The agency added, “It has been observed that the said entities were conducting their suspected/illegal business through various merchant IDs/accounts through payment channels/banks.”
Entities operated by Chinese workers were creating criminal processes through merchant IDs/payment gateways/accounts held by banks, the agency said. The agency said there were discrepancies in the addresses where they worked and what they disclosed to local authorities.
The agency said that 2.13 million dollars were seized by entities controlled by Chinese human resources and that the investigation is continuing.
The government agency has investigated more than half a dozen tech firms this year, including Chinese smartphone makers Vivo, Oppo and Xiaomi, seizing more than $1 billion in capital over fraudulent tax returns.
Last week, it also searched the premises of CoinSwitch, an Andreessen Horowitz-backed and Indian company that found more than $200 million worth of shares in violation of local forex laws, TechCrunch reported.
The Enforcement Directorate also froze assets worth more than $8 million from Wazir X last month.
Indian authorities are cracking down on apps that charge exorbitant fees and collect fees using unethical means. India’s central bank is moving ahead with guidelines for digital lending that will force companies to provide greater clarity and transparency to consumers and also curb several business practices.
Google said last month that it has banned more than 2,000 unethical lending apps in India this year.
