Mumbai: In a major move to curb the rising menace of digital financial crimes, the Reserve Bank of India (RBI) has issued a draft proposal detailing a standardized procedure to handle bank accounts linked to cyber fraud and money mule activities. Under these proposed guidelines, banks could soon be empowered to place a temporary freeze on suspicious amounts or even block entire accounts from making outward transactions.
The central bank’s primary objective with this new framework is to prevent defrauded money from being swiftly siphoned off into secondary accounts.
According to the draft, if a bank’s transaction monitoring system flags a transaction as suspicious—potentially linking it to cyber fraud or a “money mule” operation—the institution may temporarily halt the movement of that specific amount. The RBI guidelines note that transactions of ₹1,000 or more will be classified as suspicious if they trigger a fraud-related flag within the bank’s monitoring system.
Furthermore, if there are strong grounds to suspect that an entire bank account is functioning as a money mule account—a conduit used by fraudsters to receive illegal funds and transfer them elsewhere—banks will be authorized to impose a complete temporary restriction on any cash withdrawals or fund transfers from that account. Notably, individuals sometimes rent out their accounts knowingly for a commission, while others fall victim to deception and unknowingly let criminals use their banking details.
To ensure customer rights are protected during this process, the proposed rules mandate that banks must provide advance notice before applying a temporary debit freeze. This notice must explicitly state the reason for the freeze, the details of the flagged transactions, and the procedure for unblocking the account. Customers will be granted a 20-day window to respond and present their case, while the temporary freeze itself can remain active for up to 60 days.
It is important to note that these guidelines are currently in the draft stage. The RBI has opened the floor for public feedback, setting a deadline of October 2, 2026, for receiving suggestions. If finalized, the proposed directives are slated to come into effect from April 1, 2027.