India, April 12 -- Money laundering no longer moves in trunks of cash. It moves in fragments. A victim loses large sums to a phishing scam. Within minutes, the money is split into smaller transfers, routed across accounts, and withdrawn or moved again. By the time investigators look, the trail has thinned beyond recovery. This is not an isolated challenge to enforcement. It reflects a deeper shift in how illicit finance is structured in a digital economy.

India's financial architecture has transformed at remarkable speed. UPI processes billions of transactions a month. Account opening is near-instant through digital on-boarding. These gains are real and have been central to financial inclusion. But the same features that reduce friction ...