Chinese criminal syndicates and gangs are running scam operations in India and several such digital loan shark cases have been detected in the recent past and it is suspected that the scale of such illegal activities has only increased over time.
Chinese scammers are exploiting the loopholes in the legal system in the host countries, often hooking the unemployed youth and financially stressed lower strata of the society, who become easy prey for such gangs.
Investigators found that most of the kingpins are operating from China but they employ locals in neighbouring countries to run their wider transnational criminal activities which includes also to collect data and dent the Indian economy.
Pavan Duggal, Chairman of the International Commission on Cyber Security Law, stated that Chinese loan apps are significantly impacting the Indian economy as part of a broader approach. “China aims to target the Indian economy due to their past relationship with the nation. As a result, China is actively working to destabilise the Indian economy and gather as much data as possible through these loan apps.”
He also pointed out that these apps offer instant loans with high-interest rates, leading people into financial distress. While many Chinese apps fall under the IT Act of 2000, they do not comply with Indian law, causing significant financial losses in crores to Indian citizens
He also stressed the need for dedicated cybercrime courts, as existing courts are overwhelmed with criminal prosecutions. Duggal also highlighted the necessity for new legal frameworks to address the misuse of emerging technologies for criminal purposes.
According to Duggal, the pandemic has marked the beginning of a golden age of cybercrime, which is expected to continue for many decades. He believes that cybercrime has become our constant companion, and cybersecurity breaches are the new norm.
“Unfortunately, India is not fully prepared to handle this surge in cybercrime, especially with cybercriminals leveraging emerging technologies like Artificial Intelligence and tools like ChatGPT for their malicious activities,” he said.
Regarding cybercrime laws, Duggal pointed out three crucial issues. First, there is currently no dedicated law specifically addressing cybercrime. Second, certain cybercrimes are covered under the Information Technology Act 2000 and the Indian Penal Code, but not comprehensively. And thirdly, the existing laws are inadequate in effectively responding to cybercrimes, posing significant challenges in combating them.
“The government needs to bring stringent laws to deal with the people in our country who are in cahoots with Chinese loan app fraudsters,” he added.
In March this year, the Enforcement Directorate (ED) had frozen Rs 106 crore, lying in merchant IDs, and bank accounts, in the Chinese loan app case.
The ED had initiated an investigation on the basis of the FIRs registered by Cyber Crime Police Station, Bengaluru under various sections of the Karnataka Money Lenders Act, the Information Technology Act, the Karnataka Prohibition of Charging Exorbitant Interest Act and various Sections of the Indian Penal Code against numerous entities in connection with their involvement in extortion and harassment of the public who had availed small amounts of loans through the mobile apps being run by those Chinese national controlled entities.
The investigation by the ED revealed the modus operandi of these entities wherein these entities were incorporated by appointing dummy directors on behalf of Chinese nationals, obtaining KYC documents of company staff and appointing them as Directors of such entities and even opening bank accounts in their name, without their knowledge or prior consent.
“These entities were involved in criminal activities by submitting fake addresses in KYC documents and taking assistance from various professionals and other persons. They have provided instant short-term loans to the public through loan apps and other means and charged high processing fees and exorbitant rates of interest and amounts were subsequently recovered from the public by these companies by way of threatening and causing mental torture to the borrowers of the loans over the phone as well as contacting their family members, relatives and friends asking for the money,” the ED had said.
The official said that these Chinese national-controlled entities have indulged in huge money laundering activities through the merchant IDs maintained with various payment gateways, Razorpay, Cashfree, Paytm, PayU, Easebuzz and bank accounts maintained with various banks and thereby generating proceeds of crime.
(Shekhar Singh can be reached at shekhar.s@ians.in)
2023072947292
