Finance Ministry Proposes Enhanced KYC To Combat Cyber Scams

The finance ministry considers stricter KYC and more diligence measures from banks to combat financial fraud. Know details of similar moves by RBI.
Finance Ministry Proposes Enhanced KYC To Combat Cyber Scams
Finance Ministry Proposes Enhanced KYC To Combat Cyber Scams

To combat the rising instances of financial frauds like the BoB World app scams, the finance ministry is considering an enhanced Know Your Customer (KYC) procedure and more diligence by banks and financial institutions during the merchant onboarding process.

News agency PTI cited sources saying appropriate due diligence of merchants and Business Correspondents (BCs) offering banking services in remote areas is necessary not only to curb fraud but also to fortify the financial ecosystem.

They highlighted the need to strengthen data security and data protection at the level of merchants and BCs as the chances of compromise are higher at that level.

With a focus on strengthening data security at these levels, the Reserve Bank of India (RBI) may advise banks and financial institutions to review the concentration of BCs in cyber fraud hotspots and their onboarding, the sources said. Further, their focus on blocking micro ATMs involved in fraudulent activities was also sought.

This proposal was made at an inter-ministerial meeting held recently to further cyber security and check financial fraud sources said.

As per the data compiled by the National Crime Records Bureau (NCRB), a whopping 11,28,265 cases of financial cyber fraud worth Rs 7,488.63 crore were recorded in 2023 alone.

To strengthen the fight against cyber crimes in a coordinated manner, the Ministry of Home Affairs has set up the ‘Indian Cyber Crime Coordination Centre’ (I4C) to deal with all types of cybercrimes in the country.

RBI To Set Up DIGITA to Curb Illegal Lending Apps

In a bid to curb the proliferation of illegal lending apps, the Reserve Bank of India (RBI) is planning to set up the Digital India Trust Agency (DIGITA) and a public register of white-listed lending apps. This agency will verify digital lending apps and thus help maintain a public register of verified apps, thereby strengthening consumer protection measures and reducing digital crimes.

Applications lacking the 'verified' signature of DIGITA would be considered unauthorised for law enforcement purposes, thus serving as a critical checkpoint in the fight against cyber fraud.

Meanwhile, the Central bank has already shared a list of 442 unique digital lending apps with the IT Ministry to whitelist with Google. Besides, Google has removed over 2,200 digital lending apps (DLAs) from its app store from September 2022 to August 2023.

Amid growing concerns over fraudulent digital lending activities, the RBI has provided the IT Ministry with a list of 442 unique digital lending apps for whitelisting with Google. In response, Google has taken stringent measures, removing over 2,200 digital lending apps from its app store between September 2022 and August 2023.

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