In a sweeping crackdown on organised cyber fraud, Hyderabad city police have arrested 52 individuals, including 32 bank employees, for their alleged role in running a large mule account network used to siphon off funds from victims across India.
The operation, code-named “Operation Octopus 2.0,” has exposed deep-rooted collusion between cybercriminals and insiders within banks. Cases have been registered against the accused for facilitating the opening and operation of fraudulent accounts that served as conduits for illegal transactions spanning multiple states, including Telangana, Andhra Pradesh, Karnataka, Maharashtra, West Bengal, Bihar, Delhi, Rajasthan and Gujarat.
Police said several bank officials across multiple private sector banks were found to have facilitated the opening of mule accounts by bypassing due diligence and know-your-customer (KYC) norms. Among those arrested were managers, relationship managers, KYC approvers, field officers and clerks from various banks, including IndusInd Bank, Bandhan Bank, Bank of Baroda, Federal Bank, IDFC First Bank, Karnataka Bank, Karur Vysya Bank, AU Small Finance Bank, Equitas Small Finance Bank and HDFC Bank.
Police commissioner VC Sajjanar said the crackdown was aimed at dismantling organised cybercrime networks that rely heavily on access to the formal banking system. He flagged a sharp rise in investment scams and other online frauds, many of which involve psychological manipulation and coercion to extract money from unsuspecting victims.
The week-long operation was carried out by 16 specialised teams across nine states. Those arrested from banks include relationship managers, KYC approvers, probationary officers, clerks and field staff, pointing to systemic vulnerabilities and possible wilful violations of compliance norms. Investigators say these employees enabled the creation of mule accounts that were subsequently used to route and layer illicit funds.
Police findings show that at least 15 account-holders knowingly allowed their bank accounts to be used for laundering proceeds of crime, while five intermediaries acted as aggregators, sourcing such accounts and funnelling funds to the masterminds behind the fraud network.
The cybercrime police station (CCPS) in Hyderabad has so far identified around 350 bank accounts linked to nearly 850 fraud complaints, involving transactions worth close to ₹150 crore. The scams include fake investment schemes, trading frauds and so-called 'digital arrest' cases, where victims are threatened or deceived into transferring money.
During the raids, police seized key evidence, including mobile phones, cheque books, laptops and storage devices. deputy commissioner of police (cybercrimes) V Aravind Babu credited ACP (assistant commissioner of police) RG Siva Maruthi and his team for executing a coordinated, multi-state operation that cracked open the network.
Investigations are ongoing to identify higher-level operators and trace the ultimate beneficiaries of the fraud. More arrests are likely as authorities widen the probe into what appears to be a well-organised ecosystem exploiting regulatory gaps and insider access within financial institutions.
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