The draft directions have been issued following the Supreme Court’s August 4 order directing the central bank to prescribe an SOP for temporary debit holds in such cases.
Under the proposed SOP, banks will have to immediately place a temporary debit hold on a transaction identified as a suspected money mule transaction. If the entire account is identified as a suspected money mule account, the hold can be placed on the account.
A suspected money mule transaction has been defined as a transaction of ₹1,000 or more flagged by banks’ transaction-monitoring systems, including artificial intelligence (AI) and machine learning (ML)-based tools. The indicators include transactions that are unusual or disproportionate to the customer’s declared profile or are linked to an account already reported as a money mule or fraudulent.
Banks will have to immediately inform customers about the hold, the reasons for it, the process for its removal and the contact details of the concerned officer.
Customers will get 20 days to submit an explanation or justification regarding the genuineness of the transaction or account.
The bank will have to take a decision within 10 days of receiving the customer’s explanation. If no explanation is received, it will have 30 days from the date of the temporary debit hold to take a decision.
If the bank is satisfied with the explanation, it will have to remove the hold immediately.
If the bank is not satisfied, it will continue the hold and report the matter to the jurisdictional police authority. It would be done through the National Cybercrime Reporting Portal’s Citizen Financial Cyber Fraud Reporting and Management System (NCRP-CFCFRMS).
If no instruction requiring continuation of the hold is received from a law enforcement agency or competent authority within 30 days of the reference, the bank will have to remove the hold on the 31st day from the date of reference.
The maximum duration of a temporary debit hold, in the absence of such an instruction, will be 60 days from the date of the initial hold.
The RBI has proposed that account-level holds should be used as a last resort and only in exceptional circumstances.
Banks will have to put in place internal policies covering technology for identifying suspected money mule and cyber-fraud transactions.
They would need to have criteria for placing and removing holds, customer communication, linkage with the NCRP-CFCFRMS portal and grievance redressal.
Banks would still be required to file Suspicious Transaction Reports (STRs) with the Financial Intelligence Unit-India (FIU-IND).
If a bank establishes that an account is a money mule account but has not filed an STR, it will be deemed to have not complied with the know-your-customer (KYC) directions.
Banks will also have to maintain a centralised record of cases, involving temporary debit holds, including correspondence with customers and law-enforcement agencies.
Such records will have to be retained for at least five or 10 years after account closure.
Banks will also have to undertake enhanced monitoring of such accounts and other active accounts or relationships held by the customer.
For customer grievances, banks will have to designate nodal officers and display their details on their websites and at branches. Complaints will have to be resolved within 30 days.
The RBI has invited comments from banks, other stakeholders and the public by October 2. The directions are proposed to come into effect from April 1, 2027.
