Prosecution Of Fraudulent Digital Wallets In Nepal

17 Oct 2025 --
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Case 1: eSewa Phishing Scam

Year: 2025

Facts: A young man created fake websites and sent SMS messages to eSewa users claiming that their wallets were suspended. Victims were tricked into entering their login credentials and OTPs.

Modus Operandi: Social engineering/phishing attack. Once credentials were obtained, he transferred money to controlled accounts.

Legal Basis: Prosecuted under the Nepalese Penal Code (cheating/fraud), Cybercrime Act, and NRB regulations regarding unauthorized transactions.

Outcome: The perpetrator was arrested, investigations revealed over 4,000 affected accounts with a total loss exceeding Rs. 10 million.

Lesson: Highlights the importance of multi-factor authentication, user awareness, and monitoring for unusual wallet activity.

Case 2: Khalti Insider Fraud

Year: 2024

Facts: Employees of Khalti misused customers’ KYC documents to open fake wallet accounts and conduct illegal transactions.

Modus Operandi: Insider abuse; employee access to sensitive customer data used to commit financial fraud.

Legal Basis: Violations of the Payment and Settlement Act, Fraud/cheating under the Penal Code, and breach of NRB internal control guidelines.

Outcome: Employees were arrested; the wallet provider strengthened internal audits and access controls.

Lesson: Internal controls, audit trails, and restricted access to sensitive customer information are crucial to prevent insider fraud.

Case 3: Paywell and Sajilo Pay Money Laundering

Year: 2025

Facts: Two wallet providers facilitated the transfer of illicit funds linked to gold smuggling and illegal trade. Large amounts were loaded into wallets and then moved through voucher deposits.

Modus Operandi: Money-laundering via digital wallet platforms, disguising illegal funds as legitimate transactions.

Legal Basis: Prevention of Money Laundering Act, NRB regulations, and licensing violations under the Payment and Settlement Act.

Outcome: NRB revoked the licenses of Paywell and Sajilo Pay; CIB investigations ongoing.

Lesson: Wallet providers must monitor suspicious transaction patterns and report unusual transactions promptly to regulators.

Case 4: Multi-District Wallet Fraud Network

Year: 2025

Facts: A network of 21 individuals across 11 districts used wallets to conduct illegal transactions totaling Rs. 17.86 billion. Some posed as remittance inflows, masking illicit domestic transfers.

Modus Operandi: Combination of mule accounts, voucher deposits, and money transfers disguised as remittances.

Legal Basis: NRB Act, Penal Code (fraud/cheating), and AML provisions.

Outcome: Multiple arrests; the investigation focused on tracking wallet flows and identifying mule accounts.

Lesson: Fraudsters exploit multiple wallets and geographic dispersion; coordinated detection and monitoring are critical.

Case 5: Crypto and Online Gambling Fraud Using Wallets

Year: 2025

Facts: A cyber-fraud network lured victims with online gambling/crypto investment schemes. Wallets were used to transfer funds, which were then converted to cryptocurrency.

Modus Operandi: Social engineering, wallet credential misuse, cross-border crypto laundering, use of mule accounts.

Legal Basis: Cybercrime Act, Prevention of Money Laundering Act, and NRB regulations for unauthorized wallet use.

Outcome: Cyber Bureau arrested key operators; wallet transactions were frozen, and assets traced.

Lesson: Digital wallets can be part of larger cross-border cybercrime networks. Collaboration among cyber units, regulators, and wallet providers is essential to detect and block fraudulent flows.