In a major move to strengthen India’s digital payments ecosystem, the National Payments Corporation of India (NPCI) has launched an artificial intelligence (AI)-powered pilot project capable of tracking stolen money in real time as it moves across multiple bank accounts. If successful, the system could enable banks to detect and intercept fraudulent transactions before the stolen funds disappear through complex networks of mule accounts.
According to officials familiar with the initiative, nearly a dozen banks have been selected for the pilot programme. Under the project, each participating bank will run an AI model developed by NPCI on its own transaction data. The model will generate a risk score for every suspicious transaction, which will then be securely shared with NPCI for network-wide analysis.
Officials said NPCI, which operates India’s retail payment infrastructure, will aggregate these risk signals from all participating banks simultaneously. Whenever a transaction is flagged as suspicious, the system will immediately trace the movement of funds across multiple accounts. If the money is found moving unusually fast through a chain of accounts—a common characteristic of cyber fraud—the AI platform can generate alerts or facilitate intervention before the funds are fully dispersed.
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The technology is built on a federated learning architecture, enabling banks to analyse transaction data locally without sharing customers’ personal or financial information. This privacy-preserving approach allows NPCI to identify fraud patterns across the payment ecosystem while maintaining customer data confidentiality.
One of the biggest challenges in cyber fraud investigations is that victims often report the crime only after the stolen money has already been transferred through multiple bank accounts, making it difficult to trace and recover. Officials believe the new AI system could reduce this detection window from several hours—or even days—to just a few seconds, significantly improving the chances of freezing fraudulent transactions before the money disappears.
The AI model has been specifically designed to identify mule account networks, where cybercriminals rapidly transfer stolen funds through multiple bank accounts to conceal their origin and complicate recovery efforts. By detecting these abnormal transaction patterns in real time, the platform is expected to strengthen early intervention against organised financial cybercrime.
Industry experts believe NPCI’s central position within India’s digital payment infrastructure gives it a unique advantage in identifying suspicious transaction networks spanning multiple banks. Instead of analysing isolated transactions, the platform can detect broader behavioural patterns across the payment ecosystem, enabling faster identification and disruption of organised cyber fraud networks.
Renowned cybercrime expert and former IPS officer Prof. Triveni Singh described the initiative as a major technological advancement in combating cyber-enabled financial crime. He noted that organised cybercriminal syndicates typically move stolen funds through mule accounts within minutes, making recovery extremely difficult. According to him, AI-driven real-time monitoring can significantly enhance the ability of banks and law enforcement agencies to identify suspicious fund movements before the money is withdrawn or transferred further.
Cybersecurity experts also emphasised that technology alone cannot eliminate cyber fraud. They advised customers to remain vigilant against phishing links, fake investment schemes, impersonation calls, remote-access applications, and fraudulent payment requests. Immediate reporting of cyber fraud through the National Cyber Crime Helpline (1930) or the National Cyber Crime Reporting Portal remains critical, as timely reporting greatly increases the likelihood of freezing fraudulent transactions and recovering stolen funds.
If the pilot proves successful, the AI-powered fraud detection platform could become one of the most significant technological upgrades to India’s digital payments ecosystem, strengthening the country’s ability to detect, prevent, and respond to increasingly sophisticated financial cybercrime while improving the recovery of stolen funds.
