MPs Seek Crackdown On Digital Arrest Scams At MHA Panel Meet On Rising Cyber Fraud

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Last Updated:July 04, 2025, 00:07 IST

The Financial Intelligence Unit-India raised concerns over the alarming increase in cyber-enabled financial fraud, many involving mule accounts

Digital arrest scams were a focal point during the discussion on cyber fraud by the standing committee for the ministry of home affairs, which met on Thursday to look into strategies to tackle such challenges.

Representatives from the ministry of corporate affairs, as well as central probe agencies like CBI and NIA also appeared before the committee chaired by BJP MP Radha Mohan Das Agarwal.

The Financial Intelligence Unit-India (FIU-IND) raised concerns over the alarming increase in cyber-enabled financial frauds, many involving mule accounts – bank accounts operated by frauds but registered under the names of unsuspecting or complicit individuals.

According to government data, India witnessed a 21-fold increase in such cases in 2024 as compared to 2022. In the first two months of 2025 alone, 17,768 cases of digital arrest were reported with financial losses exceeding Rs 210 crore; the total damage from this fraud has now surpassed Rs 2,000 crore.

Prime Minister Narendra Modi recently warned the public about digital arrest. Experts and citizens, however, have questioned the lack of widespread public awareness campaigns.

WHAT DOES CYBER FRAUD LOOK LIKE IN INDIA?

The FIU’s internal analysis has identified recurring cyber fraud patterns that continue to victimise thousands of Indians each month. Among the most prevalent are digital arrest fraud, where scammers pose as law enforcement officials to extort money from individuals through false accusations.

Loan app scams target those with poor credit histories, offering high-interest loans and then blackmailing them using extracted personal data. Investment scams lure victims with promises of unrealistically high returns, only to dupe them once significant amounts are invested.

Job fraud schemes begin with small paid tasks, gradually convincing victims to pay for larger tasks or documentation, ultimately resulting in financial losses. Betting and gaming apps attract users with initial winnings but are rigged to ensure losses as stakes increase.

Another growing threat is the electricity bill scam, where scammers send fake alerts and phishing links, using remote access tools like Anydesk to control victims’ devices and siphon off funds.

“Why are there no public service messages on OTT platforms, cinema screens, or national television? Why aren’t awareness drives being held in schools, colleges, or government institutions? Why not educate the masses through WhatsApp alerts or SMS campaigns?" an MP asked during the meeting, as per sources. Another MP remarked: “The one that has escalated beyond expectations – digital arrest scams, now emerging as one of the most dangerous cyber frauds in the country."

Experts have called for stronger institutional accountability in this high-stakes environment. While the CBI and NIA continue to probe high-level financial crime, the I4C, under the home ministry, remains the central coordinating body for cybercrime control.

WHAT ARE THE CURRENT SAFEGUARDS?

Representatives of the FIU told the panel that consultations have been held with police and administrative officials across all states and union territories.

They said red flag indicators have been issued to banks and payment aggregators to detect and report mule accounts. Regulatory suggestions have been submitted to the Reserve Bank of India for stricter due diligence, IP monitoring, and product risk assessment. Advisories on customer verification and anti-tipping protocols have been issued in coordination with I4C, they added.

WHAT IS THE ACTION PLAN?

There is now a call for the formation of a dedicated national task force to tackle sophisticated scams like digital arrest, which often involve international actors and encrypted communications.

The FIU has urged legal reforms to prohibit the use of mule accounts and SIM cards, which serve as the foundation of these fraud networks. These tools, often procured through organised crime syndicates, are used to bypass OTP and KYC protocols, making detection even harder.

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