Indians are likely to lose over ₹1.2 lakh crore over the next year due to cyber frauds, according to a projection made by the Indian Cyber Crime Coordination Centre (I4C), which runs under the Union Ministry of Home Affairs (MHA).

A senior government official said that according to a I4C study, mule bank accounts — which are used to facilitate illegal transactions and launder money — are one of the significant contributors to the online financial scams that could potentially siphon off 0.7% of the country’s GDP.

“A majority of the defrauded money is being taken out of the country and most scams have origins in China or Chinese-linked entities. There are domestically run scams too, where money is withdrawn from ATMs after jumping through several accounts,” the official said.

Around half of the cyber crimes for which complaints are received originate in China and in pockets of Cambodia and Myanmar, I4C chief executive Rajesh Kumar had said on January 3. According to a presentation by I4C, seen by The Hindu, investigating agency identify around 4,000 mule bank accounts each day.

Crippling scams

“Cyber scams have the potential to cripple the country’s economy. They can be used for terror-financing and money laundering. For instance, during March to May, crypto currency worth ₹5.5 crore was purchased using Indian accounts and laundered outside the country through an international crypto exchange in over 350 transactions,” the official said.

During the first half of this year, until June 30, the total losses from financial fraud reported via the MHA’s cybercrime portal and 1930 helpline stood at ₹11,269 crore. The helpline and portal are linked to State police apparatus in addition to over 200 financial intermediaries, banks, and wallets. There are cases which are registered separately by the police and there are also instances when people do not report the crime.

Global scamsters

The Citizen Financial Cyber Fraud Reporting and Management System of I4C has identified 18 ATM hotspots across the country from where money was fraudulently withdrawn. Cash withdrawals have also been reported from overseas ATMs using the debit cards of mule accounts in Dubai, Hong Kong, Bangkok, and Russia.

The government has identified “scam compounds” in South East Asian countries such as Cambodia, Myanmar and Laos which resemble call centres and have emerged as a hub of investment scams. Fraudsters — including a large number from India — make calls to unsuspecting people across the country from Indian mobile phone numbers and dupe people of their money through various methods. The official said that scam compounds have also been recently identified in Azerbaijan.

Curbing mule accounts

The MHA is likely to convene a meeting with the Union Finance Ministry and the Reserve Bank of India to develop a mechanism to rein in mule accounts.

“Mule accounts cannot operate without the knowledge of banks. The bank officials have to alert if they see unusually high value transactions in accounts which have low balance or belong to salaried people. The defrauded money is usually parked in these accounts before being taken out of the country in the form of cryptocurrency,” the official said.

Another official said that banks should update their systems to identify multiple bank account logins from a single Internet Protocol address and alert the law enforcement authorities if the address is located outside the country. “Sudden change in volume and frequency of transactions should also be flagged by the banking system,” the official added.