Cyberfraud losses could amount to 0.7% of GDP, projects Ministry’s study

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Last Updated25/10/2024

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).

The Indian Cyber Crime Coordination Centre (I4C), under the Union Ministry of Home Affairs (MHA), has projected that Indians could lose over ₹1.2 lakh crore to cyber frauds in the coming year. This staggering figure, amounting to 0.7% of the country's GDP, is largely driven by mule bank accounts, which facilitate illegal financial transactions and money laundering.

A significant portion of these cyber frauds has links to China, Cambodia, and Myanmar, with money being siphoned out of the country. Mule accounts play a crucial role in these scams, where fraudulent funds are circulated through several accounts before being withdrawn, often overseas. According to I4C, around 4,000 mule bank accounts are identified daily, highlighting the scale of the issue.

Cyber frauds pose a substantial threat to India’s economy, not only through direct financial losses but also by enabling terror financing and money laundering. A recent example cited by officials involved cryptocurrency transactions worth ₹5.5 crore, laundered outside India through international crypto exchanges.
In the first half of 2024 alone, the total losses from financial fraud reported to the MHA's cybercrime portal amounted to ₹11,269 crore. However, this figure could be higher due to underreporting.

Scammers operating from Southeast Asia, particularly Cambodia, Myanmar, and Laos, have established "scam compounds" that resemble call centers. These fraudsters, often from India, use Indian mobile numbers to defraud people by posing as investment agents or service providers.
Fraud hotspots for cash withdrawals linked to mule accounts have also been identified in cities like Dubai, Hong Kong, Bangkok, and Russia.

The government, in collaboration with the Finance Ministry and the Reserve Bank of India, is working on measures to curb the use of mule accounts.
Officials emphasize that banks should monitor unusual transactions, especially in low-balance accounts, and flag suspicious activities such as multiple logins from a single IP address or a sudden spike in transaction volumes.
Tightening regulations on cryptocurrency transactions is also seen as a necessary step to prevent money from being moved out of the country.
These measures aim to reduce the escalating threat of cyber frauds that have the potential to disrupt the country’s financial and security systems.