Supreme Court orders crackdown on digital arrest scams, faster money recovery

A Supreme Court panel seeks tighter coordination between banks, intermediaries and police as digital arrest scams grow, with new measures aimed at blocking mule accounts and helping victims recover defrauded funds.

In Short

• Inter-Departmental Committee will consult banks on tackling the growing fraud method
• RBI must frame a standard operating procedure on mule accounts
• States must activate grievance systems to speed complaints and money restoration

The Supreme Court on Tuesday issued a slew of directions to strengthen the fight against digital fraud, asking the RBI to prepare and circulate a standard operating procedure for bank accounts linked to cybercrimes and directing states and Union Territories to speed up grievance redressal and money recovery mechanisms for victims.

A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana also asked an Inter-Departmental Committee set up by the Centre to consult banks and financial intermediaries on ways to prevent "digital arrest" scams and help victims recover defrauded money.

The bench was hearing a suo motu matter, 'In Re: Victims of Digital Arrest Related to Forged Documents'.

RBI SOP ON CYBER FRAUD, MULE ACCOUNTS

The Supreme Court directed the Reserve Bank of India to prepare and circulate an SOP for dealing with bank accounts linked to cyber frauds, including mule accounts.

The RBI has also been asked to provide copies of the SOP to the Registrars General of all high courts, allowing the guidelines to be made available across the judiciary.

STATES, UTs TOLD TO ACT ON GRIEVANCE, MONEY RECOVERY

The court directed all states, Union Territories and law enforcement agencies to ensure the expeditious adoption and operationalisation of grievance redressal and money restoration modules developed for victims of cyber-enabled financial frauds.

States and UTs were also asked to take steps to ensure public awareness about these grievance redressal and money restoration mechanisms so that citizens know where and how to seek help after being defrauded.

The Registrars General of all high courts were directed to apprise courts about the grievance redressal and money restoration modules, ensuring that victims are made aware of the remedies available to them.

STATE-WISE, BANK-WISE FRAUD DATA SOUGHT

Seeking greater accountability in the handling of cyber fraud complaints, the Supreme Court asked the authorities to submit a report providing state-wise and bank-wise details of grievances registered and disposed of under the cyber fraud redressal mechanism.

The data is expected to provide a clearer picture of how complaints are being handled across states and banking institutions.

FASTER DISPOSAL OF FROZEN BANK ACCOUNTS

The bench also directed authorities to take steps to ensure the expeditious disposal of matters relating to the freezing of bank accounts in cases involving cyber fraud investigations.

The direction comes amid the wider push to make the response to cyber-enabled financial crimes faster and more effective, particularly when money has already moved through banking channels.

PANEL TO CONSULT BANKS ON 'DIGITAL ARREST' SCAMS

The Supreme Court also asked the Inter-Departmental Committee constituted by the Centre to consult banks and financial intermediaries on measures to prevent "digital arrest" scams.

The committee has also been asked to explore ways to facilitate the recovery of money defrauded from victims.

The directions come a week after the apex court suggested that the Centre consider formally defining "digital arrest" in criminal law and treating it as a standalone offence carrying stringent punishment.

The latest directions seek to bring regulators, banks, financial intermediaries, state authorities, law enforcement agencies and the judiciary into a more coordinated framework to tackle digital fraud and improve the recovery of money lost by victims.

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