Chinese Groups Launder $580M in India Using Fake Apps and Mule Accounts

CloudSEK’s new report uncovers how Chinese cyber syndicates are laundering over $600 million annually in India. Learn about the shadow banking empire using fake apps, mule accounts, and illegal payment gateways that threaten India’s financial security.

CloudSEK has exposed a large-scale illegal financial operation in India, allegedly run by Chinese cyber syndicates, that’s laundering over $580 million (₹5,000 crores) annually. This shadow banking empire uses illegal payment gateways, fake mobile apps, and a network of mule accounts to move dirty money, posing a significant threat to India’s financial and national security.

According to CloudSEK’s investigation, shared with Hackread.com, the operation involves recruiting Indian citizens as money mules. Often, vulnerable individuals like unemployed youth or students are targeted through deceptive earning apps distributed via Telegram and WhatsApp.

These apps trick users into giving up sensitive banking information or even intercepting One-Time Passwords (OTPs), effectively taking control of their accounts. In other cases, people are simply paid to open new bank accounts and hand over debit cards, cheque books, and linked SIM cards to the syndicate.

Once obtained, these mule accounts become part of an illegal payment gateway system controlled by Chinese operators. This system processes funds for various illicit activities, including illegal gambling, Ponzi schemes, predatory digital lending, “digital arrest” scams, and fake stock trading platforms. Unlike legitimate payment gateways regulated by the Reserve Bank of India (RBI), these operate entirely outside legal oversight.

The funds are then laundered through a complex, multi-layered process. Money is rapidly moved between numerous mule accounts to obscure its origin. Finally, the laundered cash is often converted into cryptocurrency, primarily Tether (USDT), moved through informal hawala networks, or disguised as legitimate international trade to exit India’s financial system.

The sheer scale of this operation is staggering. CloudSEK’s analysis of just one such application revealed that around $20 million was laundered through nearly 398,675 transactions involving 34,299 mule bank accounts in a single year. Extrapolating these figures to the wider network suggests the annual laundering volume reaches up to approximately $585 million. The Indian Cybercrime Coordination Centre (I4C) advisory identified approximately 4,000 new mule accounts daily.

This illicit activity has severe consequences for the Indian economy. It funnels vast sums of untaxed wealth out of the economy, potentially weakening the Indian Rupee, and erodes public trust in digital payments. Indian citizens are victimised twice: first by the initial scam, and then by facing legal consequences for unknowingly participating as money mules.

Recent investigations by Indian law enforcement, such as the Hyderabad Police and the Enforcement Directorate (ED), have already uncovered similar large-scale money laundering operations linked to foreign nationals, freezing hundreds of millions of dollars.

“These illegal payment gateways are not just financial crimes; they’re a direct attack on India’s digital economy and citizen trust. Our research arms stakeholders with actionable intelligence to disrupt these networks and protect India’s financial sovereignty,” said Mayank Sahariya, Cyber Threat Analyst at CloudSEK.

Dismantling this shadow economy requires a strong, multi-dimensional approach. This includes enhanced AI-powered monitoring by financial institutions, stricter regulations for fintech companies, improved international cooperation among law enforcement, and widespread public awareness campaigns to educate citizens on these evolving threats and how to protect themselves.