ED attaches Rs 86.65 crore of four companies under PMLA

Hyderabad: The Directorate of Enforcement (ED) has provisionally attached Rs. 86.65 crore lying in various bank and payment gateway accounts pertaining to Non-Banking Financial Companies (NBFCs) – Kudos Finance and Investments Private Limited, Acemoney (India) Limited, Rhino Finance Private Limited and Pioneer Financial and Management Services Private Limited, which are multiple fintech companies, under Prevention of Money Laundering Act (PMLA)-2002.

According to a press release, the ED has been conducting money laundering investigations against a number of NBFCs which are in the business of instant personal micro loans. It was revealed that various fintech companies backed by Chinese funds have made agreements with these NBFCs for providing instant personal loans of term ranging from seven days to 30 days.

Fintech companies brought the funds to be lent to the public and did MoU with the defunct NBFCs for their lending license. Since the fintech companies were unlikely to get a fresh NBFC license from the RBI, they devised the MoU route with defunct NBFCs as a via media to do large scale lending activities.

It was projected that the NBFCs had hired fintech companies for customer discovery, but in reality these companies were piggybacking on the license of the NBFCs and doing large scale lending business.

Entire decisions regarding fixation of interest rate, processing fee and platform fee etc., were taken by fintech companies and these companies were operating on the basis of instructions from persons from China and Hong Kong.

The NBFC companies – Kudos, Acemoney, Rhino and Pioneer entered into MoUs with foreign backed fintech companies to carry out online lending business in India. An amount of Rs.940,46,39,498 has been considered to be proceeds of crime as the same was gained by way of predatory lending activities in violation of RBI guidelines.

The ED has identified bank balances of Rs 86.65 crore in 155 bank accounts and the same have been attached under the provisions of PMLA 2002 to preserve the proceeds of crime. Further fund trail investigation is going on.

Earlier in this case, a Provisional Attachment Order (PAO) was issued against Kudos company and its fintech partners for a value of Rs.72.32 crore. The total attachment in this case till date is Rs.158.97 crore, the press release said adding that further investigation is in progress.