“Understanding Bank Account Freeze By Cyber Crime & Consequences.”
(1) Cybercrime
a term everyone knows in this generation. In the 21st century, it is easy to overuse transactions and many features to explore the world through the Internet, which also threatens the awareness of cybercrimes that we are currently facing. According to NCRB (National Crime Records Bureau), in 2020, 136 cases of cyber crime were registered in India every day. The rate of cybercrime has increased by almost 306% in four years. Cybercrime in the 21st century has proven to be one of the deadliest revenge weapons that anyone can use to threaten or deceive others.
It is understandable that computers have become an essential part of our lives, but at the same time, an environment has been created that fosters cybercrime. As the banking sector expands its services and aims to provide superior customer service through innovation, cybercrime continues to be an issue. Cybercriminals have easy access to contacts that are accessible on the Internet. Cyber crimes cause huge financial losses that not only customers but also banks suffer and it affects the country’s economy. Non-monetary cybercrime exists when viruses are produced and spread to other devices or sensitive business information is posted on the Internet. The most common examples are phishing and farming.
(2) Cyber crimes regarding bank account freeze by the Cyber Crime
Cybercrime refers to any criminal activity that takes place on a computer or the Internet. In other words, digital fraud is called cybercrime in which criminals use computers and other electronic devices and the Internet to carry out various fraudulent activities such as money transfers and withdrawals through unauthorized access.
To narrow the environment in today’s globalized world, the banking industry offers many services to its clients and consumers, such as online banking and credit card services. “Online Debit Card Payment Customers have access to all types of banking facilities 24 hours a day and can conveniently transact and manage their accounts from anywhere in the world using the Internet and mobile phones. As we all know, these services are useful.” customers, but they also have a dark side that includes hackers and robberies.
They exploit these services by hacking into bank websites and customer accounts, causing chaos in accounts and stealing money from customer accounts. The best example was “where one hacker took one rupee from each account but got a large amount of money with that one rupee.
Effects of cybercrime
Cybercrime can have long-term consequences for the victim. Cyber attackers carry out cyber threats like taking loans, getting credit, hacking, etc., which can have devastating effects on the banking business.
The below are the effects :-
1. Financial loss
2. Infringement of confidential information
3. Legal consequences
4. Sabotage and theft to identifiable information
5. Exposed to reputation risks
Let us understand some of the important points in detail as follow :-
(I) Reasons for Bank Accounts Freeze by Cyber crime
Suspected fraudulent activities, such as unauthorized transactions or irregular account behavior, may prompt Cybercrime Units to freeze bank accounts. Identity theft and account takeover by cybercriminals may result in account freezes to prevent further abuse. Involvement in financial crimes such as money laundering or terrorist financing may result in account freezes as part of a law enforcement investigation. Financial institutions and regulators flag suspicious transactions, resulting in account freezes pending further investigation.
(II) Bank Account Freeze By Cyber CrimeProcess
Account holders are usually notified by their bank or financial institution when their account is frozen, detailing the reasons for the freeze and steps to resolve it. The freezing of bank accounts is carried out in accordance with legal regulations and under the authority of the Cyber Crime Unit or relevant law enforcement authorities. Account freezes may be temporary for investigative purposes or permanent if the account holder is involved in illegal activities. Account holders have the right to challenge the freeze and seek legal assistance to resolve the issue.
3. How can the Bank Account Freeze By Cyber Crime be unfrozen?
In India, there are legal steps to be followed to unlock a bank account that has been blocked by cyber crime authorities:
Step :1
As soon as you become aware of the account freeze, send a written application to the bank.
Step : 2
Write and submit a formal Application to concerned authorities like Cyber Crime Investigation Cell (CCIC), Police station and Bank by providing a clear explanation of your objection to the freeze, along with all supporting documentation.
If there is no response from any Appropriate authority then parties can file an application U/s. 451 & 457 of CRPC (for Defreeze the property) before the JUDICIAL MAGISTRATE FIRST CLASS (JMFC) of where complaint has been arise. if court will denial or reject the application in that situation parties can preferred superior court for an appeal.
Parties also can file a writ petition before the High court or Supreme court U/a. 226 of Indian Constitution.
CASE LAWS :
In the Case of Sri Narayan Yadav V/S State of Karnataka at Kalaburagi High Court allow for the unfreeze the Bank Account to the Petitioner. (Writ Petition Number – 226989/2020 (GM-RES))
4. What General rules does the RBI have for freezing a bank account?
The Reserve Bank of India (RBI) has been offering guidelines for banks and financial entities regarding the freezing of bank accounts since my last update in January 2022. The main objective of these regulations is to stop money laundering, financial fraud and other illegal activities. Although individual protocols may vary, the following broad parameters are derived from RBI recommendations:
Court rulings or legislative requirements give banks the power to freeze customer accounts. This could include situations where there are indications of possible fraud, unauthorized transactions or financial crimes. Notification to the account holder: Banks are usually required to inform the account holder immediately when his account faces freezing. This notification should include the reasons for the freeze and any necessary action the account holder must take to resolve the issue.
Depending on the situation, banks may freeze accounts temporarily or permanently. Temporary freezes are commonly enacted for investigative purposes, while permanent freezes may be enforced as punitive measures or to comply with legal mandates. Banks must ensure that all measures taken to freeze accounts are in compliance with relevant laws, regulations and RBI guidelines.
This includes following due process and respecting the account holder’s rights throughout the process. Banks should establish clear procedures for account holders to challenge the freeze and seek resolution. This may include providing proof of innocence or challenging the reasons for the freeze through appropriate legal channels.
For more information kindly read the Letter of RBI Reference No circular DBOD.LegBC.86/09.07.007/2001-02 dated April 8, 2002
Important Sections for the said case matter in CrPC :-
1. Section 102 – Authorization of a police officer to seize certain property: Any police officer may seize any property which may be reported or suspected to have been stolen, or which may be found under situations that originate suspicion of the commission of any crime or offense.
2. Section 105 – Order for safekeeping and disposal of property pending trial in certain cases: This section deals with the safekeeping and disposal of property seized during an investigation, allowing judges to issue orders for its safekeeping and disposal pending trial.
3. Section 451 – Order for custody and disposal of property in proceedings in other cases: This empowers a judge to make orders for the custody and disposal of property not covered by section 105, such as property seized in cases not mentioned therein.
4. Section 457 – Procedure when property may be forfeited: This outlines the procedure for determining whether property seized under the Consumer Protection Act should be forfeited to the government, including the disposition of such property.
These sections provide a legal framework for dealing with seized property during criminal investigations, ensuring compliance with the law and protecting the rights of all parties involved in the process. Understanding these provisions is key when filing a criminal complaint and navigating legal proceedings related to secured property.
Article By – Kapees Patwa