Crackdown on digital fraud: SC orders action, gives strict directions to RBI

The Supreme Court, on Tuesday, directed banks, financial intermediaries, regulators and law enforcement agencies to work together to curb the rising menace of "digital arrest" scams and improve the recovery of money lost to cyber fraud.Hearing a suo motu matter ‘In Re: Victims of Digital Arrest Related to Forged Documents', the court called for a coordinated institutional response, including faster grievance redressal, stronger mechanisms to restore victims' money and wider public awareness campaigns.The apex court directed the Reserve Bank of India (RBI) to formulate a Standard Operating Procedure (SOP) on mule accounts within four weeks, PTI cites.Mule accounts are bank accounts used by cybercriminals to receive, transfer or route money obtained through fraud. The court said stronger systems are needed to identify, freeze and prevent the misuse of such accounts.States directed to strengthen cyber fraud responseThe Supreme Court has also directed all states to operationalise cyber fraud grievance redressal and money restoration mechanisms so that complaints can be acted upon promptly and recovery efforts can begin without delay.The apex court directed the Centre to examine the feasibility of creating a shared liability and victim compensation framework for cyber fraud cases.The court also asked an Inter-Departmental Committee to consult banks and financial intermediaries on measures to tackle digital arrest scams. It said institutions must work together to detect fraudulent transactions early and improve the chances of recovering money for victims.The step comes a week after the Supreme Court suggested that the Centre consider formally defining 'digital arrest' as a separate offence under criminal law, with stringent penalties for those found guilty.Get the latest India News and Live updates. Download the TOI app.