ED seizes Rs 51 cr belonging to PCFS

Hyderabad: The Enforcement Directorate (ED) has seized an additional amount of Rs 51.22 crore lying in bank accounts and virtual accounts with payment gateways, belonging to PC Financial Services (PCFS) Private Limited under provisions of Foreign Exchange Management Act (FEMA)-1999. This is in continuation of earlier seizures of Rs 106.93 crore and Rs 131.11 crore […]

Hyderabad: The Enforcement Directorate (ED) has seized an additional amount of Rs 51.22 crore lying in bank accounts and virtual accounts with payment gateways, belonging to PC Financial Services (PCFS) Private Limited under provisions of Foreign Exchange Management Act (FEMA)-1999. This is in continuation of earlier seizures of Rs 106.93 crore and Rs 131.11 crore respectively, according to a press release issued by ED.

The release said the ED is investigating a number of Non-Banking Financial Companies (NBFCs) and Fintech companies under PMLA- 2002 for providing instant micro loans using mobile apps and then extorting high rate of interest by using personal data of customers illegally and threatening and abusing them through call centers.

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During the course of money laundering investigation, ED also initiated investigation under FEMA against PCFS, an NBFC company, that provides instant personal micro loans through its mobile application ‘Cashbean’ for suspicious foreign outward remittances. The PCFS was incorporated in 1995 by Indian nationals and got NBFC licence in 2002 and after RBI approval in 2018, the ownership moved to Chinese controlled company.

Investigation further revealed that the foreign parent companies of PCFS brought in FDI worth Rs 173 crore for lending business and within a short span of time, made foreign outward remittances worth Rs 429.29 crore in the name of payments for software services received from related foreign companies. PCFS also showed high domestic expenditure of Rs 941 crore. Detailed investigation into the foreign expenses paid by the NBFC revealed that most of the payments were made to foreign companies, which are related and owned by the same Chinese nationals, who own Opera Group.

ED has found that exorbitant payments were blindly allowed by dummy Indian directors of PCFS without any due diligence and on the instructions of the country head Zhang Hong, who directly reported to Zhou Yahui. PCFS remitted forex worth Rs 429 crore to 13 foreign companies located in Hongkong, China, Taiwan, USA and Singapore in the guise of payments for license fee for cash bean mobile APP.

All these services and applications are available in India at a fraction of the cost incurred by PCFS. Moreover, all the clientele of the NBFC was in India, despite that huge payments were made abroad and no proof of receipt of service is there. Simultaneously, during the same period of time, PCFS also booked domestic expenditure of similar amount under the same heads of expenditure. PCFS management failed to give any justification for these expenses and admitted that all remittances were done to move money out of India and to park it abroad in the accounts of group companies controlled by Chinese promoter.

Hence, PCFS illegally remitted huge funds outside India in the guise of imports of non-existent software and marketing services to park the funds abroad and hold them in the accounts of related foreign companies, the release added.

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