In News:

• ?1.2 lakh crore is the projected financial loss due to cyber frauds in India over the next year (2024), according to the Indian Cyber Crime Coordination Centre (I4C) under the Union Home Ministry.
  • This could amount to 0.7% of India’s GDP.
• Mule Accounts:
  • Mule accounts are a significant contributor to cyber frauds. These accounts are used to facilitate money laundering and illegal transactions.
  • On average, around 4,000 mule accounts are identified daily by I4C.
  • Mule accounts typically facilitate the transfer of funds out of India, often through cryptocurrency transactions.
• Sources of Cyber Scams:
  • A majority of frauds are linked to Chinese entities or China-based operations, with about half of the cybercrime complaints originating from China.
  • Other major hubs for cyber frauds include Cambodia, Myanmar, and Laos, which house call-centre-like scam compounds.
  • Azerbaijan has also been identified as a new hotspot for such scams.
• International Dimension:
  • Fraudulent withdrawals have been reported from ATMs in Dubai, Hong Kong, Bangkok, and Russia using mule accounts.
  • The international nature of these scams often involves routing stolen funds through various countries, using methods like cryptocurrency exchanges.
• Cybercrime and Terror Financing:
  • Cyber scams have potential ramifications beyond financial losses; they can be used for terror financing and money laundering.
  • Cryptocurrency is a common medium for laundering money, with an example cited of ?5.5 crore laundered through 350 transactions in a short span.
• ATM Hotspots and Fraudulent Withdrawals:
  • 18 ATM hotspots have been identified across India where fraudulent withdrawals occur.
  • Fraudsters exploit these locations to withdraw money, often using mule bank accounts and cross-border ATM networks.
• Government Response:
  • The Ministry of Home Affairs (MHA) is working to combat these frauds by convening meetings with the Union Finance Ministry and the Reserve Bank of India (RBI).
  • The objective is to curb the operation of mule accounts and strengthen the banking system to prevent such frauds.
  • Banks are being urged to flag unusually high-value transactions or accounts with low balances that are engaging in suspicious activity.
• Fraudulent Calls and Scam Compounds:
  • Indian fraudsters, in collaboration with international scam rings, use Indian mobile phone numbers to deceive citizens.
  • Countries like Cambodia, Myanmar, Laos, and Azerbaijan have been identified as hubs for investment scams involving fraudulent calls.
• Helpline and Cyber Fraud Reporting System:
  • The Citizen Financial Cyber Fraud Reporting and Management System (part of I4C) and the 1930 helpline provide mechanisms to report financial frauds.
  • ?11,269 crore in financial frauds was reported during the first half of 2024 via these channels.
  • The system also involves cooperation with over 200 financial intermediaries, including banks and wallets.