FINMIN FOR KYC IN FINANCIAL INSTITUTIONS TO CHECK FRAUD

In a bid to check incidence of BoB World app scam and other such financial frauds, the finance ministry makes a case for an enhanced KYC procedure and extensive due diligence by banks and financial institutions for onboarding merchants to safeguard customers against cyber risks, sources said.

Appropriate due diligence of merchants and Business Correspondents (BCs) who offer banking services in rural and remote areas is necessary not only to check frauds but also to fortify the financial ecosystem, sources said.

According to sources, there is a need to strengthen data security and data protection at the level of merchants and BCs as chances of compromise are higher at that level.

Therefore, sources said, RBI may advice banks and financial institutions to review the concentration of BCs in cyber fraud hotspots and their onboarding, blocking of micro ATMs found to be involved in frauds.

This was one of the suggestions made at an inter-ministerial meeting held recently with the objective of furthering cyber security and checking financial fraud, sources said.

During 2023, as many as 11,28,265 cases of financial cyber fraud worth ₹7,488.63 crore were reported, as per the data compiled by National Crime Records Bureau (NCRB).

To strengthen the mechanism to deal with cyber crimes in a comprehensive and coordinated manner, the central government, through the Ministry of Home Affairs, has set up the ‘Indian Cyber Crime Coordination Centre’ (I4C) to deal with all types of cyber crime in the country. As part of its efforts to curb growing cyber fraud, the Reserve Bank is considering setting up a Digital India Trust Agency (DIGITA) to stop the mushrooming of illegal lending apps.