After a review determined the smartphone maker had made unlawful remittances to overseas companies by passing them off as royalty payments, India announced on Saturday that it had seized $725 million from Xiaomi Corp (1810.HKlocal )’s bank accounts.
The Enforcement Directorate, India’s financial crime-fighting agency, had been looking into the Chinese company’s business operations for possible violations of Indian foreign exchange laws.
The agency announced on Saturday that it had seized Xiaomi Technology India Private Limited’s bank account assets after discovering that the company had remitted the foreign currency equivalent of 55.5 billion rupees to three foreign-based entities, including one Xiaomi group entity, “under the guise of royalty” payments.
“Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities,” the directorate said in a statement.
The directorate’s actions indicate that the Chinese smartphone maker is being scrutinized more closely. Its India office was searched in December 2021 as part of a separate probe into possible income tax cheating.