3 hrs ago
RBI Proposes Temporary Debit Holds for Money-Mule Fraud Accounts
The Reserve Bank of India wants banks to act quickly when an account may be helping cybercriminals move stolen money.
Banks could temporarily stop money from leaving the account.
This hold could last for up to 60 days if authorities do not give other instructions.
The bank must tell the account holder why the hold was placed.
The customer would get 20 days to explain the account or transaction.
The bank would then review the explanation and decide what to do.
If law enforcement tells the bank to continue the hold, the bank must follow that instruction.
The proposal would also require banks to use technology and provide ways for customers to complain.
The Reserve Bank of India proposed rules requiring banks to temporarily freeze debits from accounts linked to money-mule activity or cyber-enabled financial fraud.
The proposed temporary debit hold could last up to 60 days unless a law enforcement agency or competent authority directs otherwise.
Banks would have to notify account holders, explain the reasons and removal process, and provide contact details for a responsible officer.
Account holders would receive 20 days to submit an explanation, while banks would have 10 days to decide after receiving it.
The rules would apply to commercial banks and urban cooperative banks from April 1, 2027, or an earlier date chosen by a bank.
- Who
- The Reserve Bank of India, commercial banks, urban cooperative banks, account holders, and law enforcement agencies.
- What
- The Reserve Bank of India proposed draft rules for temporary debit holds on accounts or transactions linked to suspected money-mule activity and cyber-enabled financial fraud.
- Where
- The proposal applies to commercial banks and urban cooperative banks covered by the Reserve Bank of India's directions.
- When
- The directions are proposed to take effect on April 1, 2027, or earlier if a bank chooses to implement them sooner.
- Why
- The proposal follows a Supreme Court order directing the Reserve Bank of India to establish a standard process for temporary debit holds linked to money-mule activity and cyber-enabled fraud.
Key facts
- Maximum hold period
- 60 days without contrary instructions from a law enforcement agency or competent authority.
- Customer response period
- 20 days from the temporary debit hold to submit an explanation or justification.
- Decision after explanation
- Banks must decide within 10 days of receiving the customer's explanation.
- Decision without explanation
- Banks must decide within 30 days of the temporary debit hold.
- Covered institutions
- All commercial banks and all urban cooperative banks.
- Excluded accounts
- Nodal, pool, escrow, dividend, share capital, and other special-purpose accounts.
- Implementation date
- April 1, 2027, or an earlier date selected by a bank.
Sources
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