Indian Anti-Money Laundering Agency Searches Paytm, Razorpay

India’s anti-money laundering agency searched the premises of online payment companies including Razorpay Pvt Ltd, Cashfree Payments and Payment Services Ltd. as part of a probe into a Chinese loan app.

The Enforcement Directorate conducted the search operations in the tech hub Bengaluru on Friday amid allegations of extortion and harassment of customers involving the Chinese app, according to an e-mailed statement from the investigation agency on Saturday.

“During inquiries, it has emerged that these entities are controlled/operated by Chinese persons,” it said. They forged documents of Indians, making them “dummy directors” of the companies that were generating proceeds of crime through merchant accounts held with payment gateways and banks, the investigating agency said, adding it has seized 170 million rupees ($2.1 million).

Razorpay said some of its merchants were investigated by law enforcement about a year and a half ago.

“As part of the ongoing investigation, the authorities requested additional information to help with the investigation,” the company said, adding that it fully cooperated. “The authorities were satisfied by our due diligence process.”

A Paytm spokesperson said they are cooperating with authorities, who are investigating a specific set of merchants. “The authorities reached out to us with directions to provide certain information about these merchants under scrutiny, to which we promptly responded.”

The entities are “independent” and do not belong to Paytm, the company said in a filing to India’s National Stock Exchange, while confirming it’s providing payment processing solutions to them. It added that the funds seized by the agency do not belong to Paytm or any of its group companies.

Cashfree in a statement on Sunday said it had cooperated with the agency’s investigation, providing them the necessary information. “Our operations and on-boarding processes adhere to the PMLA and KYC directions, and we will continue to do so,” it said, referring to the Prevention of Money Laundering Act.

Late last month, the agency also premises of a16z-backed crypto exchange COINSWITCH Kuber, probing its directors and CEO after accusing them of forex laws violations. The exchange is under suspicion of acquiring shares of over 20 billion rupees in contravention of forex laws.

— With assistance by Eltaf Najafizada