A retired banker lost Rs 23 crore in a digital arrest scam early this month. While citizens need to be more alert, given that banking platforms are being misused for large-scale money laundering, stricter monitoring of suspicious transactions and mule accounts is required, explains Banasree Purkayastha
l Biggest digital arrest scam
NARESH MALHOTRA, A 78-year-old retired banker in Delhi, lost Rs 23 crore to cybercriminals over 47 days after falling prey to “digital arrest”. Cybercriminals posing as telecom operator and law enforcement agencies officials claimed his phone number and Aadhaar details had been used to open multiple bank accounts in Mumbai linked to a Rs 1,300 crore terror funding case. Over the next few weeks, he was pressured into liquidating his mutual funds, stocks and other financial holdings and transferring all his money to them for “verification”. Fake arrest warrant, chargesheet and even acknowledgements from the Reserve Bank of India were sent to him online.
This is India’s biggest digital arrest fraud — the victim himself handing over Rs 22.92 crore via 21 transactions from his bank accounts to 16 different bank accounts all across the country. Following his complaint, the Delhi Police’s Intelligence Fusion and Strategic Operations unit launched an investigation. So far, about Rs 2.67 crore has been frozen, though most of the funds were funneled through more than 4,000 layered accounts to evade detection.
l Surge in such cyber crimes
THE NUMBER OF digital arrest scams and related cybercrimes in the country almost tripled between 2022 and 2024, with defrauded amounts skyrocketing by 21 times during the period. In 2024, the number of such cases almost tripled to 1,23,672, with the total defrauded amount reported on the portal increasing by a staggering 21 times to Rs 19,35.51 crore. According to the Indian Cyber Crime Coordination Centre (I4C), in 2024, over 92,323 cases of digital arrest scams were reported in India. The total financial loss from these scams was estimated at Rs 2,140.99 crore. These scams involved victims being tricked by fraudsters impersonating officials from law enforcement or regulatory bodies such as the Enforcement Directorate, Central Bureau of Investigation, National Investigation Agency, Narcotics Control Bureau, Customs Department and even Reserve Bank of India.
l The modus operandi
IN A DIGITAL arrest, fraudsters impersonate law enforcement officials, using threats of arrest, frozen bank accounts, and passport cancellations to coerce victims into paying a “fine” or “security deposit” to avoid legal action. The scam begins with a phone call — the scammer using increasingly aggressive tactics to instill panic, often claiming that the victim is involved in serious crimes like money laundering, cybercrime, or drug trafficking. With fake documents, doctored videos, and even spoofed phone numbers, the scammers create an air of legitimacy, pushing the victim to comply with their demands. Once the victim transfers the money, the scammers vanish, leaving the victim realising they’ve been deceived only after trying to verify the situation with actual authorities. The extorted funds are often divided into smaller amounts, funneled through multiple accounts, and eventually transferred to offshore accounts for illicit use.
l Can banks help stop such scams?
SUCH SUDDEN LARGE inter-bank transfers should ideally trigger automated transaction monitoring systems under anti-money-laundering obligations. Red-flagging of accounts where huge amounts are suddenly credited and then swiftly transferred out is required, since these could be mule accounts. Recently, the National Consumer Disputes Redressal Commission (NCDRC) issued notices to a clutch of banks for alleged “deficiencies in service” in relation to digital arrest scams. The key allegation made by the three victims in this case is that the banks involved failed to follow RBI-mandated customer due diligence procedures such as verify account holder identities (KYC), monitor transactions for unusual activity, and flag or freeze suspicious accounts, and allowed large-value, high-risk transactions to proceed without any intervention. Greater oversight and intervention from banks can certainly help curtail such frauds.
l What can a victim do
THE BEST DEFENCE against digital arrests is awareness and remaining alert — do not trust unsolicited calls
or share personal details over the phone or online. Take screenshots of the caller ID, video call, messages, or documents shown to you. Record the conversation if possible. Since scammers thrive on panic, consult family members. This is especially important for senior citizens and less tech-savvy individuals. If you have shared bank details or attempted a transaction, contact your bank right away to freeze the account. Even when you have transferred money to such fraudsters, it can be retrieved if a complaint is made to the police station or National Cyber Helpline (1930) within the ‘Golden Hour’. ‘Golden hour’ refers to the critical time after a scammer has initiated a fraudulent transaction, but before the money has been fully moved or withdrawn from the account amount was transferred to.