ED seizes Rs 107 crore from Chinese loan application for breaking FEMA rules
The Enforcement Directorate (ED) seized 106.93 crore rupees from bank and shadow accounts of the non-bank financial corporation (NBFC) PC Financial Services Pvt Ltd under the provisions of the Law on Foreign Exchange Management (FEMA), officials said.
The financial investigation agency is investigating a number of NBFCs and financial technology companies under the anti-money laundering law for providing instant micro-loans through mobile apps and then extorting rates from high interest in illegally using customer personal data. Customers would even be threatened and abused through call centers.
During the investigation, the ED also opened a FEMA investigation against PC Financial Services Pvt Ltd (PCFS), which provides instant personal micro-loans through its “Cashbean” mobile application for mailings. suspicious foreign funds.
“PCFS is a 100% subsidiary of Oplay Digital Services, SA de CV, Mexico, which in turn is a subsidiary of Tenspot Pesa Ltd, Hong Kong, which is owned by Opera Ltd (Cayman Islands) and Wisdom Connection I Holding Inc (Cayman Islands)), which ultimately belong to Chinese national Zhou Yahui, ”ED officials said.
The original Indian company PCFS, according to the ED, was incorporated in 1995 by Indian nationals. She obtained an NBFC license in 2002. After RBI approval in 2018, ownership was transferred to the Chinese-controlled company.
EXTERNAL PAYMENTS ABROAD
“The investigation further revealed that the foreign parent companies of PCFS have provided foreign direct investment worth Rs 173 crore for the lending activity. In no time, they made overseas remittances worth Rs 429.29 crore on behalf of payments for software services received from related foreign companies. The PCFS also showed high domestic spending of Rs 941 crore, ”the ED said.
The ED says its investigation of PCFS’s foreign spending found that most of the payments were made to foreign companies related and owned by the same Chinese nationals who own the Opera Group.
“DUMMY INDIAN DIRECTORS”
“All the foreign service providers were chosen by the Chinese owners, and the price of the services was also set by them. ED found out that exorbitant payments were blindly authorized by the bogus Indian directors of PCFS without any due diligence and on the instructions of the country’s chief Zhang Hong, who reported directly to Zhou Yahui, a resident of China, ”the ED added. .
According to the ED, PCFS handed over foreign exchange valued at Rs 429 crore to 13 foreign companies located in Hong Kong, China, Taiwan, the United States and Singapore under the guise of paying license fees for Cashbean mobile application (Rs 245 crore per year), software technical costs (around Rs 110 crore), online marketing and advertising costs (around Rs 66 crore).
NO PROOF OF RECEIPT OF SERVICE
“All of these services and applications are available in India at a fraction of the cost incurred by PCFS. In addition, all of the NBFC customers were in India. Despite this, huge payments have been made overseas and no proof of receipt of the service is there, ”an ED official said.
According to the ED, the PCFS simultaneously recorded domestic expenditure of a similar amount under the same expenditure headings. PCFS management allegedly failed to justify these expenses and admitted that all remittances were made to move money out of India and park it abroad in the accounts of group companies controlled by the Chinese promoter.
HUGE FUNDS PARKED ABROAD
PCFS, ED claims, illegally remitted huge funds outside India under the guise of non-existent software imports and marketing services to park the funds overseas and hold them in the accounts of related foreign companies.
The ED, after identifying the local assets of PCFS, issued an order under FEMA to seize the amount of Rs 106.93 crore in its various bank accounts and payment gateway accounts.
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