SUMMARY
BricSpaces claimed that it is a victim in the case as the entities running the illegal loan apps fraudulently used its address as their registered address
Three companies which are under the ED’s scanner reportedly showed the co-working space provider’s office as their registered address
The federal anti-money laundering agency has stepped up its probe in the case, and recently also conducted searches at the premises of fintech companies like Paytm, Razorpay, among others
In another rather unusual development in the Chinese loan apps case, Bengaluru-based co-working space provider BricSpaces has reportedly come under the Enforcement Directorate’s (ED’s) scanner as multiple fraudulent companies that operated the loan-lending apps had its co-working office as their registered address.
Mudmate Technologies, Yellow Tune Technologies, and Finroot Fintech Pvt Ltd are three such companies under the ED’s scanner that used BricSpaces’ co-working office as their registered address, as per a News18 report.
The company claimed that these companies continued to use its address fraudulently despite the expiration of their leases last year.
“As a business which rents out spaces to companies, we have to collect the documents and draw up an agreement. How can we verify a PAN or Aadhaar card?” a BricSpaces official was quoted as saying in the report. The official also said that it is the government’s duty to put in place a thorough physical verification and vetting process.
Inc42 has reached out to BricSpaces for further clarification on the issue. The article will be updated on receiving a response from it.
The ED has stepped up its probe in the matter in recent months. The agency has alleged that most of the illegal loan apps, which charged exorbitant interest rates and resorted to unethical methods for loan recovery, were operated by Chinese entities or nationals.
Recently, the agency also conducted search operations at the premises of Paytm, PayU, Cashfree, and Razorpay, among others, in connection with the case.
Opposition political party Congress last month alleged that Chinese loan apps took away INR 500 Cr from Indian loan borrowers, leaving them in debt.
The report said that BricSpaces has written to the Ministry of Corporate Affairs requesting it to remove the company addresses registered at its location.
“We updated several agencies to show how companies have been misusing our addresses, but we can vet our clients only to a certain extent. Once your company has been registered to a certain address, invariably, all agencies land up at the same address if they are involved in any criminal activity,” a company official was quoted as saying.
Meanwhile, another official said that 35 more companies are misusing BricSpaces’ address and the co-working space provider has also issued a public notice in some leading newspapers with the names of all the companies.
“We believe that the documents given to us to draw up an agreement are authentic as they are provided by the government. How can one further verify the company or their line of work or antecedents? Our job is to provide space after seeing proper documents. We did just that, so why are we under the scanner?” BricSpaces’ spokesperson reportedly said.
The spokesperson also alleged that several people with fraudulent intentions are using people in the business of faking electronic KYC and other documents and troubling the landowners. This is a challenge for the entire co-working industry given there are no physical verifications that the government conducts, the spokesperson added.
“Some of the companies with expired leases committed fraud and the agencies came chasing our address. Even if we do pre-verification or checks, fraudsters can easily slip through. We are caught in the middle,” another company official reportedly said.
As per its website, BricSpaces’ customers include prominent names like Flipkart, Zomato, Ninjacart, Vedantu, Udaan, among others.
Late last month, the ED allegedly found over INR 800 Cr as proceeds of crime in its probe into 365 loan apps and their non-banking financial companies (NBFCs) partners in the money laundering case.
The law enforcement agency also found that these apps were routing their lending and recovery transactions through online payment gateways. Consequently, it also conducted searches at the premises of some of the fintech companies.
Besides, it is also examining the role of over 10 cryptocurrency exchanges in helping the entities running the illegal loan apps in transferring the proceeds of crime outside India.
