The federal agency said that decisions on setting interest rates / processing fees / platform fees etc. are made by fintech companies and that these companies are made by fintech companies and that these companies operated on the basis of instructions from people in China and Hong Kong.
The agency recently provisionally seized Rs 86.65 crore from various bank accounts belonging to non-banking financial companies under the Prevention of Money Laundering Act 2002 (PMLA).
Non-banks included M/s Kudos Finance and Investments Pvt Lts, M/s Acemoney (India) Ltd, M/s Pioneer Financial and Management Services Pvt. ltd. These are Indian NBFCs and several fintech companies associated with them.
The agency is carrying out a money laundering investigation against a number of NBFCs that are in the business of instant personal micro loans. The agency said its investigation revealed that various fintech companies backed by Chinese funds had entered into agreements with these NBFCs to provide loans for terms ranging from seven to 30 days.
Fintech companies brought in the funds to lend to the public and entered into Memoranda of Understanding (MoU) with former NBFCs for their lending license.
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Since fintech firms were unlikely to get a new NBFC license from the RBI, they devised the MOU route with old NBFCs to engage in large-scale lending business, a the agency said in a statement.
NBFCs were expected to hire fintech companies for customer discovery, but fintech companies relied on NBFC’s license and conducted large-scale lending activities, ED said.
The agency said NBFCs, namely Kudos, Acemoney, Rhino and Pioneer, have entered into MoUs with foreign-backed fintech companies to conduct online lending business in India.
The ED identified bank balances of Rs 86.65 crore in 155 bank accounts and the same were attached under the provisions of the PMLA to safeguard the proceeds of crime.
Earlier in this case, an interim seizure order was issued against Kudos Finance and its fintech partners for Rs 72.32 crore. The total attachment in this case till date is Rs 158.97 crore.