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This story is from September 10, 2022

100+ apps outwitted FIU, sent thousands of crores to China: ED

During investigation of these Chinese-controlled entities, the ED found more than a hundred apps related to loans, betting and dating, which are controlled from China. The betting apps alone have grossed revenues of Rs 1,300 crore, according to the agency.
100+ apps outwitted FIU, sent thousands of crores to China: ED
The ED found more than a hundred apps related to loans, betting and dating which are controlled from China. The betting apps alone have grossed revenues of Rs 1,300 crore, according to the agency
NEW DELHI: China’s financial invasion is something Indian authorities are as worried about as fighting its physical army at the borders.
A similar security concern has emerged after an investigation by the Enforcement Directorate (ED) revealed some Chinese nationals have illegally floated multiple Indian companies, collecting thousands of crores in revenue and repatriating them to China, undetected by the Financial Intelligence Unit (FIU).

“With the help of chartered accountants, initially dummy Indian directors were used to incorporate the companies and after some time Chinese nationals travelled to India and took directorship in these companies,” according to ED sources. The heightened concern has led to a crackdown on hundreds of Chinese-controlled mobile apps related to loans, dating and betting operatings in India.
During investigation of these Chinese-controlled entities, the ED found more than a hundred apps related to loans, betting and dating, which are controlled from China. The betting apps alone have grossed revenues of Rs 1,300 crore, according to the agency.
After freezing Rs 47 crore in HSBC Bank two years ago belonging to Chinese betting and dating apps for illegal money transfers to China, the ED shifted its focus on payment gateways, including Paytm, Cashfree and Razorpay for not reporting these high-value transactions to the FIU. This led to the seizures of Rs 17 crore last week in these wallets, allegedly belonging to the owners of Chinese loan apps and related entities. These apps and their Indian conduits were also involved in “extortion and harassment of the public”.


“There is a suspicion that apart from indulging in banned activities like online betting, this network of companies with their reliance on online wallets and their lax regulatory systems could have been used for hawala transactions as well,” the ED said. It is coordinating with banks and regulatory authorities to further take actions against these Indian payment gateways.
Indians were hired for the purpose of opening bank and trade accounts and for threatening ‘defaulters’ of loans which were extended on a very high interest rate. “The lax due diligence mechanisms of these payment gateways and their non-reporting of suspicious transactions to the regulatory authorities helped the accused to launch pan-India operations,” the ED has said in one of its attachment orders.
“Once bank accounts were opened, the internet access credentials were couriered by the Indian employees to China and major payment instructions came from the beneficial owners who were safely ensconced in China,” it said.

The probe has revealed that these Chinese nationals floated a large number of similar-looking websites which were hosted through Cloudfare, USA. “These websites attracted gullible persons to become members and use its services through various online apps,” the ED said. Even agents were hired to attract customers through special closed groups created through Telegram and WhatsApp.
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