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The agency is also pursuing the angle of money laundering against several non-bank financial and fintech companies.
The Directorate of Enforcement (ED) seized 106.93 crore from the bank and payment gateway accounts of PC Financial Services Private Limited under the Foreign Exchange Management Act (FEMA), as part of a racketeering involving the extortion of high interest rates against microcredits. given via mobile applications.
The agency is also pursuing a money laundering angle against several non-bank financial and fintech companies, based on police cases alleging that clients’ personal data was used to threaten them and extort high interest rates from them. .
During its FEMA investigation against PC Financial Services, the ED found that it also provided instant personal microloans through a mobile app called “Cash Bean.”
Investigation into the company’s ownership model revealed that it was a 100% subsidiary of the Mexican company Oplay Digital Services, which was a 100% subsidiary of Tenspot Pesa Limited (Hong Kong) which was owned by Opera Limited and Wisdom Connection I Holding Inc. of the Cayman Islands. The last two entities “ultimately belong to a Chinese national, Zhou Yahui”.
PC Financial Services was established in 1995 by Indian nationals. It obtained a non-bank finance company license in 2002 and after the approval of the Reserve Bank of India (RBI) in 2018, the ownership was transferred to Chinese-controlled entities.
Foreign parent companies brought in 173 crore for lending activities and in a short period of time sent overseas remittances worth 429.29 crore on behalf of payments for various services. .
According to the ED, PC Financial Services also posted high domestic spending of 941 crore. A detailed investigation of his overseas spending found that most of the payments were made to foreign entities related to the same Chinese nationals who owned the Opera Group.
“All the foreign service providers were chosen by the Chinese owners and the price of the services was also set by them … Exorbitant payments were blindly authorized by the bogus Indian directors of PC Financial Services without any due diligence and on the instructions of the country leader, Zhang Hong, who reported directly to Zhou Yahui, a resident of China, ”the agency said.
PC Financial Services had remitted foreign currency worth ₹ 429 crore to 13 foreign companies located in Hong Kong, China, Taiwan, the United States and Singapore. The funds were sent under the pretext of license fees for the “Cash Bean” application (245 crore per year) and software technical fees (approximately 110 crore), in addition to online marketing and advertising fees (approximately 66 crore).
All of these services were available in India for a fraction of the stated cost, the agency said.
“Simultaneously, during the same period, PC Financial Services also recorded domestic expenses of a similar amount under the same headings … Its management did not provide any justification for these expenses and admitted that all mailings of funds had been made to transfer money out of India. and to park it abroad in the accounts of group companies controlled by the Chinese promoter, ”said the general manager.
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