SC issues nationwide directions to tackle cyber fraud, asks RBI to frame SOP on mule accounts

The Supreme Court on Tuesday issued a series of nationwide directions to strengthen the response to cyber-enabled financial frauds, asking the Reserve Bank of India (RBI) to prepare and circulate a standard operating procedure (SOP) within four weeks for dealing with mule accounts and bank accounts linked to cyber fraud and money laundering.

A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana passed the directions while hearing a suo motu case titled In Re: Victims of Digital Arrest Related to Forged Documents.

After considering status reports and submissions by Attorney General R. Venkataramani, the bench observed that while progress had been made in tackling cyber fraud, existing mechanisms required "wider adoption, faster implementation and continued follow-up."

The court directed the RBI to circulate the SOP to all banks within four weeks and furnish a copy to the Registrars General of all High Courts.

The bench also directed all states, Union Territories and law enforcement agencies to ensure the expeditious adoption and operationalisation of the Grievance Redressal Module and Money Restoration Module developed under the Ministry of Home Affairs' National Cyber Crime Reporting Portal (NCRP). Authorities were also asked to create greater public awareness about the two mechanisms.

The Supreme Court asked Registrars General of High Courts to inform all courts and adjudicating authorities about the grievance redressal mechanism so that disputes relating to the freezing of bank accounts linked to cyber fraud can be dealt with more efficiently.

It clarified that while victims should ordinarily be encouraged to first use the grievance mechanism, doing so would not prevent them from pursuing any constitutional, statutory or other legal remedies available.

The court further directed authorities to submit state-wise and bank-wise data on complaints received and disposed of, along with details of restoration orders issued and the amount of money returned to victims.

Noting that only 18 states have so far established State Cyber Crime Coordination Centres, the bench directed the remaining states to notify and operationalise such centres within four weeks.

States were also asked to implement the e-Zero FIR mechanism in consultation with the Indian Cyber Crime Coordination Centre (I4C), which was directed to assist states in implementing the initiative.

The court further directed authorities to ensure the expeditious disposal of cases involving the freezing of bank accounts linked to cyber-enabled financial frauds.

It asked the Inter-Departmental Committee to issue advisories to states, ministries and departments to promote awareness campaigns on cybercrime, particularly digital arrest scams, and publicise the grievance and money restoration modules.

The committee was also directed to consult banks and intermediaries on technological measures to prevent digital arrest scams, facilitate recovery of defrauded money and improve investigation of cybercrime cases.

Additionally, the bench asked State Legal Services Authorities to conduct public awareness campaigns on cyber security, digital arrest scams and the legal remedies available to victims.

The Supreme Court also directed the Inter-Departmental Committee to examine the feasibility of introducing a shared liability and victim compensation framework for cyber fraud victims.