In a decisive crackdown on the burgeoning menace of cyber-financial fraud, the Supreme Court of India on Monday directed the Central Bureau of Investigation (CBI) to undertake a unified, pan-India investigation into cases related to “digital arrest” scams. The Apex Court, acknowledging the cross-border and sophisticated nature of these crimes, further issued notices to the Reserve Bank of India (RBI), questioning the delay in deploying Artificial Intelligence (AI) and Machine Learning (ML) mechanisms to identify and freeze bank accounts utilized by fraudsters.
A Division Bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi passed these directions while hearing a suo motu case registered following a complaint by an elderly couple from Haryana, highlighting the vulnerability of senior citizens to such organized cybercrimes.
Breaking State Barriers for a Centralized Probe
Recognizing that jurisdictional complexities often hinder the investigation of cybercrimes that span multiple states, the Supreme Court explicitly directed State Governments to facilitate the central agency’s investigation. The Bench specifically asked States—including opposition-ruled West Bengal, Tamil Nadu, Karnataka, and Telangana—to accord necessary assent to the CBI to investigate digital arrest cases within their territorial jurisdictions.
The Court observed that a fragmented approach by individual state police forces is insufficient to tackle syndicates that operate across state and national borders. To ensure seamless coordination, the Bench further directed all States and Union Territories to establish regional and state-level Cyber Crime Coordination Centres.
Accountability for Banks and Telecom Providers
The Court’s order extended beyond law enforcement to the financial and telecommunications sectors, which serve as the infrastructure for these scams.
Scrutiny of Bank Officials: Taking a stern view of the banking system’s loopholes, the Bench directed the CBI to investigate bank officials suspected of being “hand-in-glove” with fraudsters. The Court specifically pointed to the creation and operation of “mule accounts”—bank accounts held in the names of third parties to launder illicit funds—asserting that such operations often require insider assistance.
Notice to RBI on AI Usage: The Supreme Court issued a notice to the RBI, seeking a response on why advanced technologies like Artificial Intelligence and Machine Learning are not being mandated to detect suspicious transaction patterns and freeze accounts used in cyber fraud instantly. The Court remarked that the regulator must explain the lack of preemptive technological interventions despite the rising scale of financial loss.
Telecom Regulations: Turning to the Department of Telecommunications (DoT), the Bench directed authorities to ensure strict compliance regarding the issuance of SIM cards. It ordered that telecom service providers must be prevented from issuing multiple SIM cards to a single user or entity, a common practice used by cybercriminals to evade detection.
International Cooperation and Intermediary Liability
Understanding the transnational nature of these crimes, where perpetrators often operate from offshore tax havens, the Supreme Court directed the CBI to leverage the assistance of Interpol to apprehend accused persons located abroad.
Furthermore, the Court directed Information Technology intermediaries—social media platforms and communication apps often used to execute these “digital arrests”—to provide full cooperation and necessary details to the CBI during investigations.
Background of the Case
The Supreme Court had earlier expressed shock at the scale of the “digital arrest” phenomenon. During a hearing on November 3, the Court noted that over Rs 3,000 crore had allegedly been extorted from victims across the country, with senior citizens being the primary targets.
“Digital arrest” involves fraudsters posing as officials from law enforcement agencies (such as the CBI, Narcotics Control Bureau, or Enforcement Directorate) or the judiciary. Through video calls, they intimidate victims by claiming their identity has been used in illegal activities, holding them “digitally hostage” until extortion money is paid.
Solicitor General Tushar Mehta was asked by the Bench to coordinate the views of various Union Ministries, including the Ministry of Home Affairs, Ministry of Finance, Department of Telecom, and the Ministry of Electronics and Information Technology (MeitY), to present a cohesive strategy before the Court.
The matter remains under the active seizure of the Supreme Court as it monitors the implementation of these pan-India safeguards.
