SC orders nationwide action against cyber scams

• The Supreme Court issued directions aimed at strengthening the response to cyber-enabled financial frauds. 

• It asked the Reserve Bank of India (RBI) to prepare and circulate a standard operating procedure (SOP) in four weeks to deal with bank accounts linked to cyber frauds, including mule accounts.

• The Supreme Court bench was hearing a suo motu matter, “In Re: Victims of Digital Arrest Related to Forged Documents”.

What is a mule account?

• A significant challenge in preventing financial fraud is the use of money mule accounts. 

• It is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts make it difficult to trace and recover the funds.

• A money mule is a term used to describe someone who receives and moves money that came from victims of fraud. Some money mules know they are assisting with criminal activity, but others are unaware that their actions are helping fraudsters.

• Trans-national criminals create illegal digital payment gateways using mule/rented accounts. These illegal infrastructure facilitating money laundering as a service are used for laundering proceeds of multiple nature of cybercrimes.

Key directions issued by the SC bench:

• A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana directed all states, Union Territories and law enforcement agencies to ensure the expeditious adoption and operationalisation of the grievance redressal and money restoration modules developed for victims of such frauds.

• The RBI shall, within four weeks, prepare and circulate an SOP for dealing with mule accounts/accounts linked to money laundering activity and cyber-enabled fraud.

• A copy of the final SOP shall be furnished to the Registrar General of all High Courts.

• It asked the Registrar General of High Courts to apprise all courts and other adjudicating authorities of the grievance redressal mechanism to enable them to deal with freezing of bank accounts involved in cyber frauds.

• On the issue of State Cyber Crime Coordination Centres and registration of e-Zero FIRs, the bench noted that so far only 18 states have established such centres and asked the remaining states to notify and operationalise such centres within four weeks.

(The author is a trainer for Civil Services aspirants.)