ED Investigate Money Laundering Angle in Quick Disbursement Loan Apps

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365 fintech companies and their non-banking financial firm (NBFC) partners are the target of an extended money laundering investigation by the Enforcement Directorate (ED), which has reportedly uncovered criminal proceeds totaling over of 800 crore rupees.

These loan apps gained popularity during the COVID-19 outbreak, when the country was brought under lockdown and many blue-collar workers lost their jobs. These companies have been under investigation for over a year.

People privy to the ED investigation claimed that these fintech firms provided loans totaling more than 4,000 crore, after which they attempted to recover the money through telemarketing. The majority of companies are said to have borrowed licenses from former NBFCs which were granted by the RBI in return for profits ranging from 0.5% to 1%. Investigations revealed that Chinese funds were used to support the platforms in the majority of these cases.

Chinese nationals had assumed operational control or direction of service-providing companies and contributed funds to keep these applications operational.

On condition of anonymity, people in the know disclosed that out of the disbursed loans, these fintechs recovered more than Rs. interest and penalties.

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