Corruption
ED Arrests Two in Rs. 719 Crore Chinese Loan App Scam, Massive Money Laundering Network Exposed
In a major breakthrough against fraudulent Chinese loan applications, the Enforcement Directorate (ED) has arrested two individuals from Kerala for their involvement in laundering Rs. 719 crore siphoned from victims. The suspects, Sayid Muhammad and Varghese TG, were booked under the stringent Prevention of Money Laundering Act (PMLA), 2002.
According to ED officials, the accused facilitated the scam by arranging around 500 mule bank accounts, which were used to transfer illicit funds. They also set up 26 cryptocurrency accounts on WazirX, enabling the transfer of Rs. 115.67 crore offshore.
Elaborate Scam and Blackmail Tactics
The case originated from multiple FIRs lodged by victims in Kerala and Haryana. Investigations revealed that operators of these illegal loan apps exploited unsuspecting borrowers through extortion tactics. Victims were coerced into paying advance EMIs and blackmailed using their private data, which was secretly accessed when they installed the loan apps on their mobile devices.
Further inquiries revealed that the arrested individuals were handsomely rewarded for their role in setting up these fraudulent accounts—Sayid Muhammad received Rs. 2 crore, while Varghese TG earned Rs. 70 lakh.
ALSO READ: Future Crime Summit 2025 Concludes the Biggest Global Hackathon on Digital Forensics
International Money Trail
The probe uncovered that a portion of the illicit funds was routed to Singapore through legitimate banking channels and via Nium India Pvt. Ltd., disguised as software imports. In February 2024, the ED carried out extensive searches at over ten locations, including Mumbai, Chennai, and Kochi. These raids led to the seizure of multiple electronic devices containing incriminating evidence, and authorities froze Rs. 123.58 crore across various bank accounts linked to the scam.
Widening Crackdown on Fraudulent Loan Apps
This arrest comes on the heels of another major crackdown last month when the ED apprehended four individuals from Tamil Nadu involved in a similar scheme. Investigators found that shell companies linked to these individuals had funneled over Rs. 170 crore to Chinese operators via Singapore in 2023.
One of the key players in this fraudulent network, Raphael James Rozario from Vypeen, was identified as a facilitator who arranged mule bank accounts for individuals facing financial distress in exchange for commissions. Authorities also discovered that many of these mule accounts were used not just for loan scams but also for fraudulent gambling and investment applications.
Modus Operandi of the Scam
- Loan app operators lured victims by offering “easy loans” through social media advertisements.
- Once installed, these apps secretly accessed sensitive user data.
- Borrowers were coerced into making advance EMI payments.
- Victims were blackmailed using their personal information.
- Around 500 mule bank accounts were used to launder money.
- 26 cryptocurrency accounts on WazirX facilitated Rs. 115.67 crore in cross-border transactions.
The ED has stated that investigations are still ongoing as they work towards dismantling the vast international fraud network behind these scams.