Now Reading: RBI proposes 60-day debit hold on suspected mule accounts
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RBI proposes 60-day debit hold on suspected mule accounts
The RBI has proposed a standard operating procedure allowing banks to place a temporary debit hold of up to 60 days on accounts or transactions suspected of being linked to money-mule activity…
The RBI has proposed a standard operating procedure allowing banks to place a temporary debit hold of up to 60 days on accounts or transactions suspected of being linked to money-mule activity or cyber-enabled financial fraud. The draft directions follow an August order from the Supreme Court asking the central bank to create uniform rules for such holds.
Under the proposed SOP, banks must put a hold immediately on flagged transactions of Rs 1,000 or more and inform customers, who then have 20 days to explain. Banks must decide within 10 days of receiving an explanation, or within 30 days if none is given. Holds not backed by law enforcement within 30 days of referral must be lifted by day 60.
Banks must also file Suspicious Transaction Reports with the Financial Intelligence Unit and maintain records for five to 10 years. The RBI has invited public comments until 2 October. The rules are expected to take effect from 1 April 2027.
Indian Opinion Analysis
The draft SOP gives banks a structured process but also a tight 60-day deadline to resolve holds without law enforcement involvement. Under the existing RBI framework, banks already flagged suspicious transactions but lacked uniform rules for freezing funds. The key operational test will be whether the 20-day customer window and 10-day bank decision period become binding timelines or informal targets. The FIU-IND will receive the STRs alongside police referrals, creating a dual-reporting track that could accelerate or complicate investigations. The final rules face a comment deadline of 2 October, with enforcement delayed until 1 April 2027, giving banks 30 months to build the AI/ML systems and internal policies the SOP requires.
Source: rediff.com
This brief was synthesised by AI from the source linked above.
