Court mandates stringent measures to safeguard financial interests and establish a cyber-crime-resilient banking ecosystem.
In a significant ruling, the Kerala High Court, under the judgment delivered by Mr. M.A. Abdul Hakhim, J., has laid down crucial directives to address the growing menace of cyber-crime impacting Co-operative Rural Banks. The judgment was issued in the case of M/s Kunnamangalam Co-Operative Rural Bank Ltd versus Inspector of Police and others, where the petitioner sought relief from the lien imposed on its accounts due to suspected cyber-crime activities.
The court recognized the challenges faced by Co-operative Banks, which maintain mirror accounts with regular banks for facilitating online transactions. These accounts are often erroneously targeted with liens, holds, or freezes due to cyber-crime investigations, risking substantial financial losses for the banks. The judgment underscored the need for a systematic approach to identify the actual accounts involved in cyber-crime, rather than indiscriminately targeting the Co-operative Bank's accounts.
Central to the court's directive is the adherence to the Standard Operating Procedure (SOP) formulated by the Indian Cyber Crime Co-Ordination Centre, under the Ministry of Home Affairs. This SOP is part of a broader initiative to create a transparent and accountable system for managing cyber-crime-related financial disputes, in line with Section 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
The court ordered that the petitioner's account can operate with a limited lien of Rs.8,59,996/-, as per the requisitions received. The Co-operative Bank is tasked with swiftly imposing liens on the actual accounts involved, based on information provided by the regular banks. This is to prevent the loss of disputed amounts from the financial system and ensure the bank's stability.
Additionally, the court emphasized the need for Co-operative Banks to suspend digital services for accounts flagged on the NCRP-CFCFRMS platform, pending Enhanced Due Diligence (EDD). This measure is crucial for preventing money mule activities and further financial crimes.
The judgment also introduced a robust grievance redressal mechanism, allowing affected parties to contest liens or freezes imposed without proper communication within 90 days. Furthermore, any court orders to transfer lien amounts require prior notice to the petitioner, ensuring an opportunity to challenge such decisions.
This ruling is anticipated to bolster the resilience of financial systems against cyber-crimes, ensuring that Co-operative Banks can safeguard their interests while complying with national guidelines on cyber-crime management.
Bottom Line:
Cyber-crime and financial disputes involving Cooperative Rural Banks - Directions issued to manage the lien/hold/freeze transactions in accounts to safeguard financial interests and ensure compliance with the SOP of NCRP.
Statutory provision(s): Bharatiya Nagarik Suraksha Sanhita, 2023 Section 106, Prevention of Money Laundering Act, 2002 Section 12AA, SOP for National Cyber-crime Reporting Portal (NCRP) - Citizens Financial Cyber Fraud Reporting and Management System (CFCFRMS)
