‘Digital Arrest’ Money Trail Unmasked: ED Arrests Two in Goa, Court Grants Five-Day Custody

Probe traces ₹2.60-crore cyber-fraud proceeds through 400-plus accounts; agency says network converted stolen funds into cash and foreign currency

(Judicial Quest News Network)

Panaji, August 25: In a significant development in the Goa “digital arrest” case, the Directorate of Enforcement has arrested two alleged members of an organized cyber-fraud and money-laundering network that reportedly converted proceeds of online fraud into cash and subsequently into foreign currency through licensed money changers.

The ED’s Panaji Zonal Office arrested Fahim Moin Hussain Sayed and Naim Mueen Sayyed on August 23 under Section 19 of the Prevention of Money Laundering Act, 2002.

Both accused were produced before the Special Court designated under the PMLA in Goa on August 24. The Court remanded them to ED custody for five days, up to August 29.

The arrests arise from an FIR registered by the Cyber Crime Police Station, North Goa, following an alleged “digital arrest” fraud in which a Goa resident was threatened with fictitious criminal proceedings and kept under continuous surveillance over a video call.

According to the ED, the victim was made to believe that she was under investigation and was compelled to transfer ₹2,60,33,634 between May 21 and June 2, 2025. The money was allegedly deposited into bank accounts falsely described to her as “Secret Supervision Accounts”.

From bank transfers to foreign currency

The agency said its investigation has uncovered a structured financial apparatus through which cyber-fraud proceeds were rapidly moved, layered and converted.

The money allegedly entered dormant or newly opened bank accounts before being dispersed through more than 400 beneficiary accounts by way of bank transfers, cash withdrawals, self-cheques and payment gateways.

The trail subsequently led investigators to an interconnected network of commodity, trading, travel and foreign-exchange entities.

According to the ED, these entities were used to convert cyber-fraud proceeds initially received as ordinary banking credits into cash and thereafter into foreign currency through companies holding Reserve Bank of India licenses as Full-Fledged Money Changers.

The agency has alleged that the entities collectively carried out banking transactions exceeding ₹27,850 crore and deposited approximately ₹2,904 crore in cash.

Of this amount, around ₹584.70 crore was deposited through 61,448 separate transactions at Bulk Note Acceptance Machines across multiple locations.

The ED has described the scale and pattern of the cash deposits as inconsistent with the stated nature of the entities’ ordinary businesses.

163 FIRs across 20 States and UTs

The investigation has also revealed that the bank accounts linked to the entities are allegedly connected to 330 victim complaints and 163 FIRs registered across 20 States and Union Territories.

The complaints collectively involve reported losses of approximately ₹417.49 crore.

In at least 101 complaints, the money allegedly taken from a single victim was routed into two or more entities belonging to the same group during the course of the same fraud. The ED has stated that this pattern indicates that the accounts functioned as a common financial pool rather than as accounts maintained by independent businesses.

The agency is now examining whether the two accused were part of the operational structure that received, layered, withdrew and converted the alleged proceeds of cyber fraud.

Companies allegedly controlled through proxy directors

The ED further alleged that several companies used for routing the money were incorporated in the names of persons of modest means, including employees, drivers and residents of single-room tenements.

Although these individuals were shown in official records as directors, the agency stated that the bank accounts and business affairs of the companies were controlled by other persons.

This alleged use of proxy or front directors forms a significant part of the money-laundering investigation, particularly in determining who exercised effective control over the companies and their bank accounts.

Searches yield ₹3.25 crore in cash

The ED conducted searches under Section 17 of the PMLA at 20 premises in Mumbai and Goa on July 17. Further searches were conducted at additional premises on August 21.

During the searches, the agency seized:

• Cash amounting to ₹3.25 crore.
• Digital devices.
• Books of account and financial records.
• Statutory registers and other corporate documents.

The ED also froze syndicate-linked bank accounts holding balances exceeding ₹30 crore. The seized material and digital devices are currently being examined as part of the ongoing investigation.

ED issues public warning

The Directorate has reiterated that no investigating or law-enforcement agency in India places a person under “digital arrest”, conducts a criminal investigation through a video call or directs anyone to transfer money to an account for “verification”, “supervision” or any similar purpose.

The agency has cautioned citizens that any such demand is fraudulent.

Persons receiving such calls have been advised to immediately disconnect and report the incident to the national cybercrime helpline at 1930 or through the National Cyber Crime Reporting Portal.

The arrests and remand order mark the latest stage of the investigation. The ED has stated that further investigation into the alleged cyber-fraud network, its financial conduits, proxy directors and foreign-exchange channels is in progress.