{"id":3794,"date":"2025-01-20T09:00:12","date_gmt":"2025-01-20T03:30:12","guid":{"rendered":"https:\/\/bankerstrust.in\/column\/?p=3794"},"modified":"2025-01-20T12:17:15","modified_gmt":"2025-01-20T06:47:15","slug":"greed-to-fear-changing-faces-of-cyber-fraud","status":"publish","type":"post","link":"https:\/\/bankerstrust.in\/column\/greed-to-fear-changing-faces-of-cyber-fraud\/","title":{"rendered":"Greed to Fear, Changing Faces of Cyber Fraud"},"content":{"rendered":"
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Retired schoolteacher Eloise Parker has a lonely life but shares a warm friendship with Adam Clay, who lives in her barn and works as a beekeeper. One day, Parker falls for a phishing scam that bankrupts her, costing her her life\u2019s savings, including the $2 million-plus from the charity she runs.<\/p>\n

Devastated, she kills herself with a gun. Clay discovers her body, and the FBI agent, who is Parker\u2019s daughter, arrests him. After being cleared and released, Clay contacts a mysterious group called the Beekeepers for information that will help him find the people behind the phishing attack on Parker. The search leads to a call centre.<\/p>\n

Want a glimpse into the world of cybercrime? Watch The Beekeeper<\/em>, a 2024 American action thriller film. Closer home, there is Jamtara \u2013 Sabka Number Ayega<\/em>, an Indian crime drama television series that gives us a peek into the world of social engineering. It was released on an OTT platform in January 2020.\u00a0 The second season came out in September 2022, and the audience lapped it up for the latest trends in cybercrime it drew attention to.<\/p>\n

Cybercrime is evolving fast.<\/p>\n

On January 9, the Times of India <\/em>reported that the Kolkata Police had arrested 11 people in connection with a nationwide crackdown on a digital arrest scam. With this arrest, they claimed to have resolved over 930 complaints from across the country.<\/p>\n

In the October episode of Mann Ki<\/em> Baat<\/em>, Prime Minister Narendra Modi raised an alarm over the rapid rise in cases of digital fraud across India. Mann Ki Baat<\/em> (Speaking from the Heart) is an Indian programme hosted by Modi in which he addresses the citizens through the All India Radio, DD National and DD News.<\/p>\n

Going by data provided by the government in Parliament, the number of cyber fraud cases has skyrocketed from 2,677 in 1999-2000 (FY20) to 29,082 in FY24 \u2013 more than a 10-fold increase. The latest annual report of the Reserve Bank of India (RBI) pegs the digital payment frauds at Rs 1,457 crore in FY24, up more than five times in a year. It\u2019s not just the numbers of fraud. What\u2019s alarming is the growing sophistication of the fraudsters, which is exposing the vulnerabilities within the financial system.<\/p>\n

India is not unique when it comes to cybercrime. On November 11, Singapore introduced the Protection from Scams Bill in Parliament. With the passing of this Bill on January 7, the \u2018Lion City\u2019 has become the first country in the world to give police the power to control the bank accounts of scam victims who do not keep their eyes open.<\/p>\n

Armed with the power to issue restriction orders (ROs), the police in Singapore will be able to restrict transactions in an individual\u2019s bank account such as money transfer, use of ATM facilities and credit facilities as well as over-the-counter transactions. The police can issue an RO to a bank if they believe the victim will transfer money to the scammer. The objective is to protect the victim.<\/p>\n

Singapore is losing around $2 million to scams daily. In the first half of 2024, more than $385.6 million was lost in 26,587 cases reported in Singapore; in 86 per cent of all reported scams, the victims had made voluntary transfers to the scammers.<\/p>\n

In August, before this Bill was introduced, Singapore\u2019s largest business email compromise (BEC) scam was busted, leading to the recovery of $41 million. This is possibly the first instance of international cooperation arresting cybercrime.<\/p>\n

A commodity firm in Singapore fell victim to a sophisticated fraud scheme on July 19 last year. Cybercriminals impersonated a supplier and tricked the firm into transferring the funds to a fake bank account. The police sprung into action. With the intervention of Interpol’s Global Rapid Intervention of Payments (I-GRIP), a large part of the stolen funds were quickly recovered, making it the largest recovery ever.<\/p>\n

The I-GRIP programme, which has been instrumental in intercepting hundreds of millions of dollars in illicit funds, is now in the spotlight. It was launched in 2022 specifically to stop financial cybercrimes. It\u2019s a rapid-response system that enables law enforcement agencies across Interpol’s 196 member countries, including India, to quickly intervene in financial transactions suspected of being linked to criminal activities.<\/p>\n

When a suspicious transaction is identified, I-GRIP facilitates the rapid exchange of critical information, allowing authorities to halt the transaction and prevent the funds from being transferred to the fraudsters. This process involves close collaboration between financial institutions and law enforcement agencies, and ensures that the right information is available at the right time to effectively combat financial crime.<\/p>\n

The I-GRIP mechanism is a critical tool in Interpol’s arsenal. This stop-payment mechanism facilitates cooperation between countries, enabling authorities to trace, intercept, and freeze the proceeds of crimes across borders. In the case of the $42.3 million BEC scam in Singapore, the police\u2019s swift request for assistance through I-GRIP played a critical role in the recovery.<\/p>\n

While Singapore has empowered its police to control the bank accounts of scam victims, banks in India are often helpless when it comes to dealing with mule accounts that are being used to siphon off money at stage two. Once the fraudsters are successful in drawing a big chunk of money from an account, the money is typically split into small parcels, and it then flows into the mule accounts. The mule account holders withdraw the money and pass it on to unknown fraudsters, while keeping a small \u201ccommission\u201d. Since such accounts are KYC-compliant, banks find it difficult to suspend them.<\/p>\n

The Centre has frozen around 450,000 \u201cmule\u201d bank accounts in the past year, according to a report in The Indian Express<\/em>. These accounts are typically used to launder money drawn from cyberfraud. While such accounts are spread across various banks, they have been identified to be in high concentration in the State Bank of India, Punjab National Bank, Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank.<\/p>\n

Officials of the Indian Cyber Crime Coordination Centre (I4C), which reports to the Ministry of Home Affairs, have conveyed this to the Prime Minister\u2019s Office during a meeting where the shortcomings of the banking system were discussed. They also highlighted that fraudsters are nowadays withdrawing payments from such \u201cmule accounts\u201d \u2014 which are usually created using KYC documents of another person \u2014 through cheques, ATMs, or digitally.<\/p>\n

Banks have reported a new kind of fraud in recent years \u2013 chargeback scam. Fraudsters raise chargeback disputes under the category \u201cgoods and services not received\u201d and claim refunds from the acquiring banks for transactions that never took place.<\/p>\n

Typically, one buys some stuff from a provision store, pays through a payment app and then raises a dispute with his own bank (issuer bank) which, in turn, refers it to the merchant acquiring bank through the network. There were reports of thousands of chargeback disputes raised by the \u201ccustomers\u201d in a northern state in 2023.<\/p>\n

All of us are now keenly waiting for the digital payments intelligence platform, which the RBI has proposed to set up to mitigate frauds and payments fraud risks. A committee, headed by AP Hota, former MD and CEO of the National Payments Corporation of India (NPCI), is examining the aspects of setting up the digital public infrastructure for the platform.<\/p>\n

Through this platform, the RBI will be able to provide real-time intelligence to identify suspicious and fraudulent transactions, with the ability to stop and recover. This is what the industry needs at the moment, something on the lines of what Singapore has done. NPCI also runs a fraud management system, which works in real time.<\/p>\n

It’s not an easy task since the fraudsters are always ahead of the victims and the modus operandi evolves fast. Earlier, greed was the main reason a person fell prey to cyber fraud; now, it is fear. The key to fighting this is mass awareness. To tackle cybercrime, India needs to repeat what it did for financial inclusion \u2013 launch a nationwide campaign.<\/p>\n

This column first appeared in Business Standard.<\/em><\/strong><\/p>\n

The writer, Consulting Editor with Business Standard and Senior Adviser to Jana Small Finance Bank, writes Banker’s Trust every Monday in Business Standard.<\/em><\/strong><\/p>\n

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