‘Digital arrest’ fraud: ED’s probe reveals use of bogus accounts, hawala operations

The ED suspects that multiple layers of transactions were used to mask the end-recipients of the crime’s proceeds and to show the funds as untainted

MUMBAI: A multi-state money laundering investigation by the Enforcement Directorate (ED) into a crime syndicate that allegedly extorted ₹1.15 crore from a victim by placing him under ‘digital arrest’ has revealed the usage of bogus bank accounts and multiple layers of financial transactions to divert the proceeds of crime. The ED suspects that multiple layers of transactions were used to mask the end-recipients of the crime’s proceeds and to show the funds as untainted, agency sources said.

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The ED’s probe is based on a case registered by the cyber crime police station in Ahmedabad city against unknown persons who allegedly defrauded the complainant of ₹1.15 crore. The case was registered under provisions of the Indian Penal Code and the Information Technology Act after the complainant was placed under ‘digital arrest’, which involves criminals impersonating law enforcement officials to intimidate and trap victims to extort money. Victims in such cases are virtually ‘detained’, monitored and manipulated into transferring money under the guise of legal compliances.

The ED’s probe revealed that the extorted amount of ₹1.15 crore, which comprises the proceeds of crime, was first transferred to bank accounts maintained in the name of a fruit-trading firm and a charitable trust. The money was then transferred almost instantaneously to several other bank accounts across the country in tranches of ₹5-10 lakh, via interbank electronic fund transfers and instant real-time payment transfers.

Thereafter, the funds were either withdrawn in the form of cash or were further transferred to another set of bank accounts through interbank electronic fund transfers, ED sources said. The ED is currently trying to identify the end-beneficiaries in the case.

The agency’s western region unit recently conducted searches in at least 10 locations in Ahmedabad, Surat and Andhra Pradesh connected with the case. The searches led to the recovery and seizure of ₹3 lakh out of the defrauded amount, digital records and details related to the use of illegal hawala operations.