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₹600 cr intercepted by India’s cyber fraud reporting system: FATF report

Nov 19, 2023 

Over ₹600 crore has been intercepted and prevented from reaching online fraudsters by India’s unique cyber fraud reporting system, a new report by the global anti-money laundering and terrorist financing watchdog has said.

The interception has taken place since the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS) was launched in April 2021, the Financial Action Task Force (FATF) said in a report released on November 9, citing the system’s ability to prevent illicit financial flows from cyber frauds as “good practice” that member countries could emulate.

“The system has been highly effective in preventing fraudulent transactions from going into the hands of fraudsters,” the FATF report said.

The CFCFRMS is an online system developed by the Indian Cyber Crime Coordination Centre (i4C), an arm of the home ministry, for quick reporting of financial cyber frauds and preventing the flow of fraud proceeds across financial sectors. The system has brought together law enforcement agencies of all states and union territories as well as 243 financial entities that include banks, virtual wallets, payment aggregators and gateways, and e-commerce platforms to work in tandem and take immediate action on complaints reported on CFCFRMS.

“Once a victim reports a fraud to a law enforcement agency, details of the beneficiary of the fraudulent transaction is recorded and submitted to the CFCFRMS system in the form of a ticket. This ticket is escalated to the concerned financial entity (bank, payment wallet, etc.), which sees the ticket on its system’s dashboard,” an official of i4C said, declining to be named.

The entity then checks if the defrauded money is still in the account and puts it on hold. If the amount has been sent to another entity, the ticket is escalated to that next entity, the official said. The process is repeated until the money is intercepted, he added. If the money is withdrawn, the details of withdrawal are filled by the financial entities for further action by law enforcement agencies, the official said.

“CFCFRMS, the initiative to trace the money siphoned off by criminals, is noteworthy because recovering money quickly gives confidence to the citizens that government is working,” said Karnal Singh, former chief of the Enforcement Directorate that investigates financial crimes.

The FATF report also mentions action taken by the federal agency against money laundering through shell companies and use of virtual assets over the past couple of years.

Referring to the ED’s probe against loan apps, the report also says the federal agency has found and frozen proceeds of crime in the form of balances available in the bank accounts held by various shell entities to the tune of ₹86.5 crore.

In another report related to terror financing of non-profit organisations, the FATF, without naming any country, has recommended that member countries should be “mindful of the potential impact of measures on legitimate NPO activities. Disproportionate obligations on NPOs may hinder their legitimate activities and the delivery of much needed services, thus affecting economic and other human rights.”

“Countries should aim to prevent and prosecute, as appropriate, terrorist financing and other forms of terrorist support. Where NPOs suspected of, or implicated in, terrorist financing or other forms of terrorist support are identified, the first priority of countries must be to investigate and halt such terrorist financing or support,” it said. “Actions taken for this purpose must respect the rule of law and should, to the extent reasonably possible, minimise negative impact on innocent and legitimate beneficiaries of NPO activity.”

[The Hindustan Times]

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