The growing number of cyber fraud and “digital arrests” in Delhi is highlighting a key challenge in tackling financial crime: tracing not only the fraudsters but also the banking channels used to move stolen money.
The issue goes beyond how criminals deceive victims. Questions are also being raised about how bank accounts are opened, operated and repeatedly used to transfer lakhs and crores of rupees without triggering sufficient safeguards.
A recent Dwarka case shows the scale of the problem. A 74-year-old retired Indian Railways employee and his wife were allegedly subjected to a 7-day “digital arrest” by men posing as officials of the National Investigation Agency and the Anti-Terrorism Squad. The couple were made to believe they were involved in a serious criminal case and were kept under virtual surveillance while the fraudsters took money from them.
Behind such frauds is often a less visible financial network. Investigations in several cybercrime cases have found that stolen money frequently moves through regular bank accounts rather than sophisticated digital wallets. Many of these are “mule accounts”, opened or controlled by individuals who allow criminals to receive and transfer illicit funds.
This raises questions about bank Know Your Customer procedures, transaction monitoring and systems used to identify unusual activity. An account belonging to someone with limited financial activity receiving multiple high-value transfers from unrelated people and quickly moving the funds onward should raise concerns. Repeated links to fraud complaints could provide even stronger warning signs.
The possibility of negligence or active connivance by bank officials also needs examination, although the distinction remains important. Banks cannot be held responsible for every fraudulent transaction, given the volume of transactions they process and the constantly changing methods used by cybercriminals.
Delhi Police has specialised units handling cybercrime and financial fraud. While these units have made progress in tracing digital footprints and arresting organised fraud networks, the scale of the problem suggests that the approach needs to expand.
Investigators must examine not only who operated suspicious accounts, but also how they were opened, who completed the KYC verification, what transaction alerts were generated, whether those alerts were acted upon and whether the accounts had earlier been linked to suspicious activity.
Banks should not automatically be treated as accomplices. However, they need to become an integral part of the investigative framework against cybercrime.
Public advisories warning people not to share OTPs or transfer money to strangers are not enough. Tackling cyber fraud also requires disrupting the financial infrastructure that enables it.
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