The Supreme Court has issued a comprehensive set of directions aimed at strengthening the institutional architecture for prevention, investigation and redressal of cyber-enabled financial frauds commonly referred to as “digital arrest” scams.
A Bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohana directed the Reserve Bank of India (RBI) to formally adopt and circulate a Standard Operating Procedure (SOP) for banks dealing with accounts suspected to be connected with cyber fraud. The directions were issued in suo motu proceedings concerning victims of digital arrest-related fraud.
The Court also called for more effective mechanisms for grievance redressal and restoration of defrauded funds, besides directing an inter-departmental committee to examine the feasibility of introducing a framework based on shared liability and compensation for victims.
The directions followed consideration of a status report submitted by the Indian Cyber Crime Coordination Centre (I4C), which indicated that money restoration had already been achieved in 36,290 cases. An aggregate amount of approximately ₹18.05 crore had reportedly been restored with the involvement of 57 banks and authorities across all States and Union Territories.
The Bench also took note of steps undertaken by the Central Bureau of Investigation (CBI). The agency has registered cases concerning digital arrest scams and allied cyber frauds, traced victims through transactions involving 67 first-layer bank accounts and conducted searches at 93 locations spread across 16 States.
While acknowledging the progress made by enforcement agencies, the Court emphasised that the mechanisms already established require wider implementation, expeditious disposal and sustained monitoring.
The Supreme Court directed the RBI to formally adopt and circulate its SOP within four weeks. The framework is to prescribe the course of action to be followed by banks when accounts are suspected to be linked with cyber-enabled financial fraud, including the imposition of temporary debit restrictions.
Significantly, the SOP is required to incorporate a structured grievance-redressal mechanism and a mechanism for restoration of money defrauded from victims. The Court also directed that adequate public-awareness measures be incorporated so that victims are made aware of these remedial avenues.
The Registrars General of all High Courts have been directed to disseminate information concerning the grievance-redressal mechanism among courts and adjudicatory authorities dealing with orders for freezing bank accounts.
The Court further indicated that persons aggrieved by the freezing of their accounts should, in the first instance, be encouraged to utilise the designated grievance-redressal mechanism
The Court has directed every State and Union Territory to notify and operationalise its State Cyber Crime Coordination Centre within four weeks.
The States and UTs have additionally been directed to implement the e-Zero FIR mechanism in consultation with the I4C, with the Ministry of Home Affairs (MHA) required to extend necessary assistance for the process.
Authorities have also been directed to ensure expeditious adjudication and disposal of proceedings concerning the freezing of bank accounts in cases involving cyber-enabled financial fraud.
The Supreme Court has further tasked the inter-departmental committee with issuing appropriate advisories to States, Union Territories, Ministries and government departments for undertaking extensive public-awareness campaigns concerning the prevention of cybercrime and digital arrest scams.
Such campaigns are also expected to inform citizens about the grievance-redressal and money-restoration mechanisms, as well as the MHA’s SOP governing the custody and restoration of defrauded funds.
The inter-departmental committee has additionally been directed to coordinate with banking institutions on measures aimed at preventing digital arrest frauds, facilitating recovery of siphoned funds, assisting criminal investigations and ensuring compliance with the applicable statutory and regulatory framework.
The Court’s directions reflect an emphasis on disrupting the financial architecture underpinning cyber fraud, particularly at the stage when unlawfully transferred funds enter banking channels and can potentially be traced, frozen and restored.
Addressing the question of victim restitution, the Bench directed the inter-departmental committee to examine a proposal for introducing a shared-liability regime and a dedicated victim-compensation framework for persons defrauded through digital arrest scams.
The Court also directed Legal Services Committees across the country to undertake awareness initiatives concerning cybercrime prevention, cybersecurity safeguards and the legal and institutional mechanisms available for recovery of defrauded money.
The inter-departmental committee has further been asked to examine whether the existing monetary threshold governing CBI investigation of cyber fraud cases should be reduced.
It has also been tasked with considering whether multiple cases attributable to the same organised cybercrime network could be aggregated for the purpose of determining whether the monetary threshold for CBI intervention is satisfied.
In another significant direction, the Supreme Court asked the Ministry of Electronics and Information Technology (MeitY), Department of Telecommunications (DoT) and I4C to examine a proposal for imposing time-based restrictions on audio and video calls through telecom services.
The authorities have been directed to place before the Court a brief note assessing the feasibility and utility of such restrictions, along with possible alternatives.
The direction assumes significance given the modus operandi of digital arrest frauds, in which perpetrators frequently impersonate police officers, investigating agencies or other public authorities and maintain prolonged audio or video communication with victims to create an atmosphere of intimidation and urgency.
The proceedings will next be taken up by the Supreme Court in September.
The post Supreme Court directs RBI,states to strengthen framework against digital arrest scams;calls for victim compensation mechanism appeared first on India Legal.