India’s financial crime agency ED has sent notices to China’s Xiaomi, America’s Citigroup, British HSBC & Germany’s Deutsche Bank for violating rules.
India’s financial crime agency has issued notices to Xiaomi, Deutsche Bank, HSBC, and Citigroup regarding charged illegal money transfers made by the Chinese smartphone company to international entities. The agency made the announcement on Friday.
ED’s appellate authority has issued show cause notices under India’s foreign exchange laws for reported illegal remittances worth ₹55.51 billion rupees ($673.2 million). Agency has been freezing funds since last year.
In the latest development, it has been reported that companies are being issued show cause notices by federal agencies.
These notices are being sent to inquire about the reasons why the agency should not take action against the company for any wrongdoing.
The Chinese tech company Xiaomi as well as the three banks did not reply to calls for comments.
Xiaomi’s local unit in India has been accused of making illegal monetary transfers to foreign entities by disguising them as royalty payments, according to reports.
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The Chinese company has reaffirmed its stance that all payments made were legitimate and it will take necessary measures to safeguard its reputation and interests.
Xiaomi and its officials, including the chief financial officer of its India unit, have been issued notices by the ED, according to a statement released by the agency.
According to the agency, banks have been issued notices for allegedly allowing foreign remittances to be described as royalty payments without executing adequate research and obtaining necessary documentation.
Last year, according to Reuters, Indian investigators accused Xiaomi of deceiving its banker Deutsche by falsely claiming to have a royalty payment agreement for several years.
Xiaomi’s frozen assets have been found to be distributed among several banks, including Deutsche, Citi, and HSBC, according to court documents.
One of India’s top smartphone players has experienced rapid growth in recent years by providing budget smartphones. The company in question is Chinese. In the rapidly growing South Asian market, it is in competition with Samsung Electronics and other Chinese brands.
In a recent development, Xiaomi has stated that the asset freeze imposed on them last year was severely disproportionate and had brought their operations in India to a halt. Xiaomi’s request to lift the freeze was rejected by an Indian court in April.
