ED attaches assets to fintech companies that have Chinese links

New Delhi, July 6 (IANS): The Enforcement Directorate (ED) said on Wednesday that it has so far attached Rs 86.65 crore lying on various bank accounts and payment gateway accounts linked to NBFCs, namely Kudos Finance and Investments Private Limited, Acemoney (India) Limited, Rhino Finance Private Limited and Pioneer Financial and Management Services Private Limited, and several fintech companies affiliated with the aforementioned NBFCs under the Money Laundering Prevention Act (PMLA).

The total attachment in this case to date amounts to Rs 158.97 crore.

ED conducts a money laundering investigation against a number of NBFCs that operate immediate personal microloans.

“It was revealed that various fintech companies backed by Chinese funds have entered into agreements with these NBFCs to provide immediate personal loans with maturities of seven to 30 days. The fintech companies brought the funds to be lent to the public and signed MoUs with the discontinued NBFCs for their lending license.

“Since the fintech companies were unlikely to obtain a new NBFC license from the RBI, they developed the MoU route with discontinued NBFCs as one via the media to carry out large lending activities. It was estimated that the NBFCs had hired the fintech companies for customer discovery, but in reality, fintech companies were piggybacking on the license of NBFCs and indulging in large-scale lending activities, “says an ED official.

He said that all decisions regarding fixed interest rates, processing fees, platform fees, etc. were made by fintech companies that operated on instructions from people based in China and Hong Kong.

The NBFC companies, namely Kudos, Acemoney, Rhino and Pioneer, entered into MoUs with foreign-backed fintech companies to conduct online lending activities in India.

An amount of Rs 940,46,39,498 has been considered to be the proceeds of crime, as the same was achieved by predatory lending activities in violation of RBI’s guidelines. ED has identified bank balances of Rs 86.65 crore on 155 bank accounts, and the same has been attached in accordance with the provisions of the PMLA to preserve the proceeds of crime. Further fund track investigation is ongoing.

Earlier in this case, a PAO was issued against Kudos Finance and Investments Private Limited and its fintech partners worth Rs 72.32 crore.