Digital Arrests | MHA Proposes SOP Before Supreme Court, RBI To Consider Staff Accountability & Liability Framework

In the suo motu case taken up by the Supreme Court over "digital arrest scams", the Ministry of Home Affairs has filed a status report proposing a Standard Operating Procedure to strengthen inter-agency coordination and ensure timely restoration of defrauded funds wherever possible.It may be recalled that a bench of Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice NV Anjaria is hearing the suo motu case. Pursuant to the Court's order, the MHA had constituted a High-level Inter-Departmental Committee (IDC) to comprehensively examine all facets related to "digital arrests”.Recently, Attorney General R Venkataramani informed that the 2nd meeting of the IDC took place on February 2, where various stakeholders informed about the key steps taken so far. As per the latest status report submitted before the Court, the following measures have been apprised by various agencies : Central Bureau of Investigation (CBI):Based on the data shared by I4C, CBI has identified digital arrest cases involving losses of ₹10 crore or more for investigation and the same will be taken up for investigation. Necessary action is being taken for obtaining consent under Section 6 of the Delhi Special Police Establishment Act, 1946.Department of Telecom (DoT) : Multiple measures were taken including - (a) Notification of Draft Telecommunications (User Identification) Rules, 2025 (Draft Rules) to address negligent SIM issuance, multiple SIMs and mule SIMs through biometric-based identification under the Telecommunications Act, 2023. The Draft Rules are likely to be notified within the next two months.(b) Notification of draft Telecommunications (Radio Equipment Possession Authorisation) Rules, to deal with SIMBOX related issues.(c) Issuance of directions for SIM binding and to fix the session duration to Telecommunication Identifier User Entities (TIUEs) providing app-based communication services in India, including WhatsApp, Telegram, Signal, Arattai, etc., on 28.11.2025, expected to curb VoIP-based digital arrest scams. (d) Action taken for enforcement, which includes penalties for non-compliant CAF cases (pending realisation), blocking of spoofed international calls (with implementation of CIOR), re-verification of mule SIMs, operationalisation of Sanchar Saathi and Digital Intelligence Platform (DIP)(e) Further actions to finalise and notify the Telecommunications (User Identification) Rules, 2025; examine the feasibility of a victim compensation framework in coordination with stakeholders; review gaps in bulk and corporate SIM issuance; identify SIM card supply chain fuelling cybercrime etc. Reserve Bank of India :The RBI informed the IDC of the following measures - (a) Deployment of AI Monitoring Tools: Adoption of "MuleHunter.ai" by 26 banks, while other institutions continue to utilize proprietary AI/ML systems.(b) Application of PMLA Provisions: Evaluation of the applicability of Section 12AA of the Prevention of Money Laundering Act (PMLA) for the temporary suspension of suspicious transactions. This matter requires further legal scrutiny through a dedicated consultation involving the DOR, RBI, I4C, and the Ministry of Home Affairs (MHA). (c) SOP for Debit Holds: Formulation of a draft Standard Operating Procedure (SOP) for placing temporary debit holds to curb mule accounts and cyber fraud, in compliance with the directives of the Hon'ble High Court of Kerala.(d) Compensation and Liability Framework: Development of a liability framework to address compensation in cases of authorized transactions induced by fraud is under consideration.(e) Delayed Transaction Mechanisms: The feasibility of implementing delayed transaction mechanisms to mitigate fraud risks is under examination.(f) System Integration: The feasibility of integration of the National Cybercrime Reporting Portal (NCRP) with the Account Aggregator and Central KYC (CKYC) frameworks to facilitate quick reporting is being worked out. (g) Staff Accountability: Establishment of strict accountability for personnel involved in KYC lapses or complicity, including the invocation of the Prevention of Corruption Act,1988, where applicable, will be done.The Ministry of Home Affairs : The MHA stressed upon its proposed SOP for managing cyber financial fraud cases, specifically - (a) Account Management: Protocols for the freezing and unfreezing of bank accounts linked to cyber fraud incidents via the NCRP mechanism.(b) Transaction Holds: Mechanisms for placing and rescinding liens on fraudulent funds within the banking system.(c) Restitution Framework: Procedures for the refund and restoration of funds secured through the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS), utilizing the Online Money Restoration Module as the central mechanism for returning defrauded amounts to rightful owners. (d) Grievance Redressal: Establishment of a transparent, time-bound, and accountable online Grievance Redressal Mechanism for individuals aggrieved...

Digital Arrests | MHA Proposes SOP Before Supreme Court, RBI To Consider Staff Accountability & Liability Framework

Anmol Kaur Bawa & Debby Jain

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Digital Arrests | MHA Proposes SOP Before Supreme Court, RBI To Consider Staff Accountability & Liability Framework

Anmol Kaur Bawa & Debby Jain

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