Financial services

ED seizes ₹288 crore from Chinese financial services PC

FEMA’s competent authority, Commissioner of Customs, Chennai, has confirmed the total seizure of ₹288 crore made by ED against Chinese financial services PC NBFC.

The Enforcement Directorate (ED) had seized bank/payment gateway funds worth ₹288 crore belonging to PC Financial Services Private Limited (NBFC) under 3 seizure orders issued under the provisions of the Foreign Exchange Management Act 1999 (FEMA).

ED is investigating a number of NBFCs and Fintech companies under PMLA, 2002 for providing instant micro-loans online using mobile applications (APPs) and then extorting high interest by misusing misusing customers’ personal data and threatening and abusing them by calling. centers.

Suspicious foreign money transfers

During the money laundering investigation, ED also opened a FEMA investigation against PC Financial Services Private Limited, an NBFC company, which provides instant personal micro-loans through its “Cashbean” mobile application. ” for suspicious foreign remittances.

PCFS is ultimately beneficially owned by Chinese national Zhou Yahui. The investigation further revealed that the foreign parent companies of PCFS brought in FDI worth ₹173 crore for lending activities and in a short period of time made foreign remittances worth a worth ₹429.29 crore to Chinese-controlled related foreign companies, on behalf of payments for non-existent software services.

PCFS also posted strong domestic spending of ₹941 crore. ED discovered that exorbitant payments were blindly authorized by PCFS’s dummy Indian directors without any due diligence and on the instructions of country chief Zhang Hong, who reports directly to Zhou Yahui of China. Therefore, PCFS had violated FEMA provisions and equivalent assets were subject to seizure. Thus, seizure warrants were issued.

Further, based on ED’s investigation, RBI and the IT department have also opened an investigation against the said NBFC.

Published on

February 09, 2022