Chennai (Tamil Nadu) [India], January 28 (ANI): The Directorate of Enforcement’s (ED) Chennai zonal office arrested two people in connection with a “digital arrest” scam, in which the accused allegedly defrauded people with mule accounts, and converted illicit cash into cryptocurrency and transferred it overseas.
ED had started investigating the alleged scam after a complaint by a senior citizen to Chennai Police, mentioning that the two scammers defrauded the person of Rs 33 Lakh.
“Both suspects played a key role in managing mule accounts, converting illicit cash into cryptocurrency, and transferring it overseas,” read a statement by ED.
According to the statement, one of the accused was apprehended in Kolkata, and other one in Delhi.
ED has claimed that the accused also misused Cash Deposit Machines (CDMs) to deposit cash into the accounts of companies offering fintech services.
“These funds were then routed to individual accounts, enabling the accused to obtain cryptocurrency. This cryptocurrency was allegedly used to conceal and transfer the Proceeds of Crime (POC) abroad with the assistance of accomplices using foreign phone numbers,” the statement added.
ED investigation uncovered a network of layered mule bank accounts used to route fraudulent funds.
Accordingly, the agency also conducted searches at over 20 locations across various states including West Bengal, Madhya Pradesh, Uttar Pradesh, Gujarat, and Maharashtra as part of the investigation.
“During the searches, multiple mobile phones, laptops, and other electronic devices containing substantial incriminating evidence were seized. Cryptocurrency in the form of BTC and USDT was also found and seized,” read a statement by the directorate.
The agency said that the accused alleged had a “sophisticated system” of withdrawing cash from “mule accounts,” converting it to cryptocurrency and transferring the funds abroad.
“ED investigation revealed a sophisticated system wherein cash withdrawn from mule accounts was converted into cryptocurrency and transferred to entities suspected to be based abroad. Significant amounts of funds, originating from various digital fraud schemes, were routed through this method,” ED’s statement added.
The agency has claimed that they have uncovered “major lapses” by several fintech companies which have failed to comply with Know Your Customer (KYC) norms, and examining the role of such companies.
“Several fintech companies failed to comply with Know Your Customer (KYC) norms and accepted cash deposits from bogus entities and individuals. These cash deposits, running into hundreds of crores, are suspected to be tainted money originating from Digital Crimes. The role of these fintech companies, their distributors, retailers, and associated bank accounts is being examined,” read the statement. (ANI)
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