Tag: ed

Paytm Spokesperson Says ED Not Investigating New Cases, Searches Related to Old Probes: Report

Paytm has reportedly denied anything new being investigated in the recent search by the Enforcement Directorate (ED) at the company’s premises on Wednesday. As per a report, a Paytm spokesperson clarified that the federal agency has only sought information linked to the ongoing probes on certain merchants in recent search operation. It was reported earlier in the day that ED has conducted searches on certain premises of One 97 Communications’s Paytm and payment solutions provider PayU. The federal agency also investigated the companies earlier this month.

According to an ANI report, the ED launched a search operation at Paytm premises on Wednesday. However, according to a Paytm spokesperson, the recent ED searches does not involve any new information being investigated. The federal agency is reportedly seeking additional information on the ongoing probes on certain merchants, as per the spokesperson.

The spokesperson from Paytm also mentioned that the company has shared whatever information was sought by the Directorate of Enforcement (ED), according to the report. “As we have mentioned before, ED continues to seek information about certain merchants from various payment service providers, we have shared the required information,” mentioned the report citing the spokesperson.

Paytm and PayU earlier faced ED queries at six premises in Bengaluru on September 3. The company also released a statement on the search operation, stating, “As a part of ongoing investigations on a specific set of merchants, the ED has sought information regarding such merchants to whom we provide payment processing solutions. It is hereby clarified that these merchants are independent entities, and none of them are our group entities.”

At the time of these searches, the ED also instructed Paytm to freeze certain amounts from the Merchant IDs of a specific set of merchant. Paytm clarified that the frozen funds do not belong to the company or any of its subsidiaries.

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ED Raids Promoters of Kolkata-Based Mobile Gaming App, Seizes Over Rs. 7 Crore in Cash

The Enforcement Directorate (ED) raided the promoters of a Kolkata-based mobile gaming app company on Saturday. According to the government agency, the officials have recovered cash over Rs. 7 crore during the raid, which was a part of a money-laundering investigation. The gaming app titled E-Nuggets and its promoter, identified as Aamir Khan and others, were investigated by the ED after an FIR was filed against the company, according to a report. The ED revealed about the latest raid through a tweet.

The federal agency announced seizing over Rs. 7 crore in cash in a raid at half-a-dozen locations of the gaming app E-Nuggets and its promoters. According to the statement provided by the officials on the tweet, “ED has been carrying out search operations under the provisions of the PMLA, 2002 (on 10.09.2022) at 6 premises in Kolkata, in respect to an investigation relating to the Mobile Gaming Application.”

According to an ANI tweet, a picture revealed by the federal agency after the raid displayed seized Rs. 500, Rs. 2,000 and Rs. 200 currency notes stacked together.

The ED mentioned that the money laundering case was investigated in relation to an FIR filed in February last year at the Park Street Police Station, as per the report.

The federal agency reportedly claims that the mobile gaming application E-Nuggets was launched with a motive to defraud the public. After gaining trust from their customers, who started investigating greater commissions on the app, the promoters stopped the feature to withdraw the money under several pretexts such as system upgradation or investigation by law enforcement agencies.

The app allegedly deleted all the data of the users later.



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ED Raids WazirX for Money Laundering Investigation, Freezes Bank Deposits Over Rs. 64.67 Crore

The Enforcement Directorate (ED) on Friday said it has frozen bank deposits of Rs. 64.67 crore as part of a money laundering probe against crypto currency exchange WazirX.

The federal agency said it conducted raids against a director of Zanmai Lab Private Limited, which owns WazirX, on August 3 in Hyderabad and alleged he was “non-cooperative”.

The agency’s probe against the crypto exchange is linked to its ongoing investigation against a number of Chinese loan apps (mobile applications) working in India.

The agency had charged WazirX last year for alleged contravention of the Foreign Exchange Management Act (FEMA).

“It was found that Sameer Mhatre, Director WazirX, has complete remote access to the database of WazirX, but despite that he is not providing the details of the transactions relating to the crypto assets, purchased from the proceeds of crime of instant loan app fraud.” “The lax KYC norms, loose regulatory control of transactions between WazirX and Binance, non-recording of transactions on block chains to save costs and non-recording of the KYC of the opposite wallets has ensured that WazirX is not able to give any account for the missing crypto assets,” the ED alleged in a statement.

It said the company made no efforts to trace these crypto assets. “By encouraging obscurity and having lax AML (anti-money laundering) norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route,” it said.

Therefore, the ED said, equivalent movable assets to the extent of Rs. 64.67 crore lying with WazirX were frozen under the Prevention of Money Laundering Act (PMLA).

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ED Probing WazirX in 2 Cases, Transactions With Binance ‘Cloaked in Mystery’, Says MoS Finance

Minister of State for Finance Pankaj Chaudhary on Tuesday said the Enforcement Directorate is probing alleged money laundering of Rs 2,790 crore through crypto exchange WazirX. The ED is investigating two cases related to cryptocurrency against WazirX under the provisions of Foreign Exchange Management Act, 1999 (FEMA), he said in a written reply to the Rajya Sabha.

“In one of the cases, investigation done so far has revealed that one Indian Crypto-exchange platform, WazirX, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of Cayman Island based exchange Binance. Further it has been found that all crypto transactions between these two exchanges were not even being recorded on the blockchains and were thus cloaked in mystery,” he said.

Accordingly, he said, a show cause notice (SCN) has been issued under the provisions of FEMA against WazirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.

Further, in another case, it is noticed that Indian Exchanges namely WazirX has allowed the foreign users’ request to convert one crypto into another on its own platform as well as by using transfer from third-party exchanges namely FTX, Binance, etc, he said.

In reply to another question, Chaudhary said cryptocurrencies and non-fungible tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage.

Therefore, any legislation for regulation or for banning possession of and trade in such a borderless sector can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards, he said.

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Vivo India Directors Said to Leave Country as ED Intensifies Money Laundering Probe

Vivo India directors Zhengshen Ou and Zhang Jie left the country as the Enforcement Directorate intensified its inquiry into the money laundering case against the Chinese firm, said sources.

The information comes a day after the agency carried out searches at 40 locations in connection with the case.

The federal agency on Tuesday conducted searches at 40 locations in Uttar Pradesh, Madhya Pradesh and some southern states in connection with a case linked to Vivo Mobile Communications and some other Chinese firms.

The case is already being investigated by the Central Bureau of Investigation (CBI).

IT department, as well as the Ministry of Corporate Affairs, is also keeping a close eye on the Chinese manufacturing firms. The ED raid is an extension of the probe against Chinese firms.

The ED conducted these searches with respect to violations of the Prevention of Money Laundering Act (PMLA).

Sources said that local units of Vivo Mobile Communications are under the radar for alleged financial improprieties as part of an investigation into other China-based firms.

The Ministry of Corporate Affairs is learnt to have a special focus on potential violations including fraud.

In the case of Vivo, an inquiry was sought in April this year to detect if there were “significant irregularities in ownership and financial reporting”.

Further investigations are underway.

Meanwhile, China on Wednesday expressed hope that India will conduct the ongoing investigations into the Chinese mobile manufacturer firm Vivo in accordance with the law and regulations and provide a “fair” and “non-discriminatory” business environment to China’s firms.

Asked about the ongoing raids on Vivo offices in several locations in India, Chinese Foreign Ministry spokesman Zhao Lijian told a media briefing here that the Chinese side is closely following the developments on this matter.

“As I have stressed many times, the Chinese government always asks Chinese companies to abide by laws and regulations when doing business overseas,” he said.

 

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Indian Crypto Exchanges Under ED Scanner for Probe on Money Laundering, Foreign Exchange Violations

A bunch of crypto exchanges in India have found themselves embroiled in a legal controversy. CoinDCX, WazirX, and CoinSwitch Kuber have been served notices by the Directorate of Enforcement (ED), India’s financial watchdog. The exchanges will be probed in cases of money laundering and violating foreign exchange laws. Along with ED, authorities concerned with India’s foreign exchange management act (FEMA) will also be part of the investigations on these crypto exchanges.

FEMA is “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.”

“Crypto is an early-stage industry with a lot of potential. We receive queries from various government agencies. Our approach has always been that of transparency,” a CoinSwitch spokesperson told Gadgets 360.

Citing CoinDCX, media reports said the ED is seeking details on how crypto exchanges in the nation work overall.

Both CoinDCX and WazirX have claimed to be in compliance with India’s laws and are ready to work with the law enforcement agencies.

The development comes at a time when the Indian crypto sector is already struggling under market volatility and the implementation of new tax laws. It may further impact the trading volumes on these exchanges.

Already, the average daily transaction volume on Indian exchanges WazirX, CoinDCX, BitBNS, and Zebpay reportedly dipped to $5.6 million (roughly Rs. 44 crore) in the last few days. Up until June, this volume was around $10 million (roughly Rs. 80 crore).

Not only is the global crypto industry going through a downtime, but India’s one percent TDS law on each crypto transaction, has dented trading volumes of these virtual digital assets.

India still awaits a more detailed legal framework governing the crypto sector, work on which is ongoing under Sitharaman’s supervision.

Meanwhile, this is not the first time that Indian exchanges have bene summoned by law enforcement authorities.

In June 2021, WazirX received a show cause notice from the ED for contravention of the FEMA, 1999, for cryptocurrency transactions worth Rs. 2,790.74 crore.

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India Should Stop ‘Regulatory Assault’ on Chinese Firms, Chinese State Media Says After Xiaomi Accusations

India should stop its “regulatory assault” on Chinese companies, state-backed Chinese newspaper Global Times said, after smartphone maker Xiaomi alleged threats of “physical violence” in Indian investigations.

Reuters reported on Saturday that Xiaomi had told a court that its top executives faced threats and coercion during questioning by the Enforcement Directorate investigating illegal remittances. The agency, the Enforcement Directorate, called the allegations “untrue and baseless”.

Citing the story, the Global Times in an opinion piece late on Sunday said the uncertainty surrounding Xiaomi’s “regulatory predicament should raise a red flag for India” and asked New Delhi to stop its “regulatory assault on Chinese companies”.

“The impression that Chinese and other foreign companies could be intentionally targeted and suppressed isn’t something good or favourable for India,” it said.

“It is of great importance for India to maintain normal and effective communication and coordination with Chinese investors.”

Many Chinese companies have struggled to do business in India due to tensions following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then — including TikTok — and tightened norms for Chinese companies investing in the country.

Global Times is a nationalistic tabloid published by the Communist Party’s People’s Daily. Its views do not necessarily reflect the official thinking of policymakers.

The Enforcement Directorate and a government spokesperson did not immediately respond to a request for comment on the Global Times’ view. Xiaomi, the biggest smartphone seller in India with a 24 percent market share and 1,500 employees, also did not respond.

The ED on April 29 seized $725 million (roughly Rs. 5,600 crore) in Xiaomi’s India bank accounts, saying it made illegal remittances abroad “in the guise of royalty” payments.

A court last week put on hold the agency’s decision, and the case will next be heard on May 12. Xiaomi denies any wrongdoing and says all royalty payments are legitimate.

“It is fair to say that Xiaomi hasn’t been able to communicate effectively with Indian regulators,” Global Times said. “What has happened to Xiaomi could be seen as another example of India’s crackdown on Chinese companies.”

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Xiaomi’s Allegations of Coercion Baseless, Enforcement Directorate Says

The Enforcement Directorate on Saturday rejected as “baseless” the allegations that the statements of Xiaomi India officials, the wholly-owned subsidiary of Chinese mobile manufacturing company Xiaomi, were recorded “under coercion”, saying the charges were an afterthought.

The federal agency was responding to certain news reports that said Xiaomi alleged in a recent filing before the Karnataka High Court that its top executives were threatened with “physical violence and coercion” during their questioning by ED investigators in Bengaluru.

The Enforcement Directorate (ED) issued a statement saying it was “a professional agency with strong work ethics and there was no coercion or threat to the officers of the company at any point of time”.

“The allegations that the statement of the officials of Xiaomi India was taken under coercion by ED is untrue and baseless.” “The officials of Xiaomi India deposed their statements before ED under FEMA voluntarily in the most conducive environment on various occasions,” the agency said.

It said the statements were deposed by them on the basis of documents and information provided by the company during the course of investigation.

“Their statements corroborate with the written replies submitted to ED and the material on record,” the agency said.

The development comes in the backdrop of ED passing an order on April 29 to seize Xiaomi India’s funds worth over Rs. 5,551 crore over the alleged violation of the Indian foreign exchange law (Foreign Exchange Management Act).

The Karnataka High Court earlier this week stayed this ED order.

The agency added that the statement of Xiaomi global vice president Manu Kumar Jain was recorded on four occasions, April 13, April 14, April 21 and April 26 while that of chief financial officer (CFO) Sameer B S Rao was recorded on six occasions.

Rao’s statement were recorded on March 25, April 14, April 19, April 21, April 22 and April 26, it said.

“However, no complaint was filed by them at any point of time during recording of statements at various occasions.”  “Last statement of the officials of the company was recorded on 26.04.2022 and the seizure order was passed on 29.04.2022. It appears that allegation now made after passage of substantial time is an afterthought,” it said.

The agency said the allegations of Xiaomi are “baseless and far from the facts.” Xiaomi is a trader and distributor of mobile phones in the country under the brand name of MI.

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Xiaomi Said to Accuse Enforcement Directorate of ‘Physical Violence’ Threats During Probe

Chinese smartphone maker Xiaomi has alleged its top executives faced threats of “physical violence” and coercion during questioning by India’s financial crime fighting agency, according to a court filing seen by Reuters.

Officials from the Enforcement Directorate warned the company’s former India managing director, Manu Kumar Jain, current Chief Financial Officer Sameer BS Rao, and their families of “dire consequences” if they did not submit statements as desired by the agency, Xiaomi’s filing dated May 4 stated.

The Enforcement Directorate did not immediately respond to a request for comment.

Xiaomi has been under investigation since February and last week the Indian agency seized $725 million (roughly Rs. 5,570 crore) lying in the company’s India bank accounts, saying it made illegal remittances abroad “in the guise of royalty” payments.

Xiaomi has denied any wrongdoing, saying its royalty payments were legitimate. On Thursday, a judge heard Xiaomi lawyers and put on hold the Indian agency’s decision to freeze bank assets. The next hearing is set for May 12.

The company alleges intimidation by India’s premier enforcement agency when executives appeared for questioning multiple times in April.

Jain and Rao were on certain occasions “threatened … with dire consequences including arrest, damage to the career prospects, criminal liability and physical violence if they did not give statements as per the dictates of” the agency, according to the filing in the High Court of southern Karnataka state.

The executives “were able to resist the pressure for some time, (but) they ultimately relented under such extreme and hostile abuse and pressure and involuntarily made some statements,” it added.

Xiaomi declined to comment citing pending legal proceedings. Jain and Rao did not respond to Reuters queries.

Jain is now Xiaomi’s global vice president based out of Dubai and is credited for Xiaomi’s rise in India, where its smartphones are hugely popular.

Xiaomi was the leading smartphone seller in 2021 with a 24 percent market share in India, according to Counterpoint Research. It also deals in other tech gadgets including smart watches and televisions, and has 1,500 employees in the country.

FIGHT OVER REMITTANCES

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then and also tightened norms for Chinese companies investing in India.

Tax inspectors raided Xiaomi’s India offices in December. On receiving information from tax authorities, the Enforcement Directorate — which probes issues such as foreign exchange law violations — started reviewing Xiaomi’s royalty payments, court documents show.

The agency last week said Xiaomi Technology India Private Limited (XTIPL) remitted foreign currency equivalent of $725 million (roughly Rs. 5,570 crore) to entities abroad even though Xiaomi had “not availed any service” from them.

“Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities,” the agency said.

Xiaomi’s court filing alleges that during the investigation, Indian agency officials “dictated and forced” Xiaomi India CFO Rao to include a sentence as part of his statement “under extreme duress” on April 26.

The line read: “I admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group.”

A day later, on April 27, Rao withdrew the statement saying it was “not voluntary and made under coercion”, the filing shows.

The directorate issued an order to freeze assets in Xiaomi’s bank accounts two days later.

Xiaomi has said in a previous media statement it believes its royalty payments “are all legit and truthful” and the payments were made for “in-licensed technologies and IPs used in our Indian version products.”

Its court filing stated Xiaomi is “aggrieved for being targeted since some of its affiliate entities are based out of China”.

A Xiaomi spokesperson provided the following statement to Gadgets 360 about its reported accusation:

“The contents of the writ petition are confidential qua public at large. There seems to be a want to create some sort of sensationalism without considering the impact that it will have on the ED, Govt of India, and the company. This matter is subjudice and under the consideration of court of law. We refuse to comment on this. We reserve our rights in all respects and will take steps as we may be advised to safeguard our reputation.”

© Thomson Reuters 2022

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ED Seizes Rs. 5,551 Crore of Xiaomi India in Alleged Foreign Exchange Violation Case

Funds worth over Rs 5,551 crore of Chinese mobile manufacturing company Xiaomi India have been “seized” for violating the Indian foreign exchange law, the Enforcement Directorate said said on Saturday.

The action has been taken against Xiaomi Technology India Private Limited. The company (also called Xiaomi India) is a trader and distributor of mobile phones in the country under the brand name of Mi.

“Xiaomi India is wholly owned subsidiary of China-based Xiaomi group. This amount of Rs. 5,551.27 crore lying in the bank accounts of the company has been seized by the Enforcement Directorate,” the agency said in a statement.

The seizure of funds has been done under relevant sections of the Foreign Exchange Management Act (FEMA) after a probe was launched by the federal agency against the company in connection with alleged “illegal remittances” sent abroad by the Chinese firm in February.

In a statement provided to Gadgets 360 responding to the ED move, a Xiaomi spokesperson said:

“As a brand committed to India, all our operations are firmly compliant with local laws and regulations.
We have studied the order from government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings.”

Xiaomi started its operations in India in 2014 and started remitting the money from the next year, it said.  “The company has remitted foreign currency equivalent to Rs. 5,551.27 crore to three foreign based entities which include one Xiaomi group entity, in the guise of royalty,” the ED said.

Such huge amounts in the name of royalties were remitted on the instructions of their Chinese “parent group” entities, it alleged.  “The amount remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities,” the ED said.

It said while Xiaomi India procures completely manufactured mobile sets and other products from the manufacturers in India it has not availed any service from these three foreign based entities to whom such amounts have been transferred.  “Under the cover of various unrelated documentary facade created amongst the group entities, the company remitted this amount in guise of royalty abroad which constitute violation of section 4 of the FEMA,” it said.

The said section of the civil law of FEMA talks about “holding of foreign exchange.” The ED also accused the company of providing “misleading information” to the banks while remitting the money abroad.

Earlier this month, the ED had also questioned the global vice president of the group, Manu Kumar Jain, at the agency’s regional office in Bengaluru, Karnataka.



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