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Seeks RBI’s Response on Use of AI to Freeze Fraud Accounts

New Delhi: Expressing grave concern over the alarming rise of “digital arrest” frauds across the country, the Supreme Court on Monday directed the Central Bureau of Investigation (CBI) to conduct a unified, pan-India investigation into such cybercrime cases. The top court also questioned the Reserve Bank of India (RBI) on why it has not deployed Artificial Intelligence (AI) and machine learning tools to identify and freeze bank accounts used by cybercriminals.

A Bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi passed the directions while hearing a suo motu case triggered by a complaint from an elderly couple in Haryana who were victims of digital arrest fraud.

What is the ‘Digital Arrest’ Scam?

Digital arrest is a rapidly growing form of cybercrime in which fraudsters impersonate law enforcement officials, court authorities, or government agency personnel through audio-video calls. Victims are falsely accused of grave offences, threatened with immediate arrest, and coerced into transferring money to multiple bank accounts under extreme psychological pressure.

The Supreme Court observed that senior citizens are the most vulnerable targets, and in many cases, their entire life savings are wiped out within hours.

States Asked to Grant Consent for CBI Probe

To ensure uniformity and effectiveness in the investigation, the Bench directed several States — including West Bengal, Tamil Nadu, Karnataka and Telangana — to accord their consent to the CBI for probing digital arrest cases within their respective jurisdictions. The Court underlined that fragmented investigations by different States were insufficient to tackle a crime network that operates in a coordinated, multi-state, and cross-border manner.

RBI Asked Why AI Isn’t Being Used

The Bench issued a formal notice to the RBI, seeking a detailed response on why AI and machine learning technologies are not being actively used to detect suspicious transaction patterns. Flag mule accounts in real time and freeze fraudulent bank accounts instantly. The Court remarked that with India’s advanced digital banking infrastructure, technology must become the first line of defence against cyber fraud.

Probe into Bank Officials Aiding Fraud

In a stern warning, the Supreme Court directed the CBI also to investigate the role of bank officials who may be hand-in-glove with cyber fraudsters, particularly in the operation of mule accounts. A mule account is a bank account opened in another person’s name and used by criminals to route illegal funds, making the money trail extremely difficult to trace.

Role of Interpol and Tech Platforms

Acknowledging the international dimension of cyber fraud, the Court directed the CBI to seek assistance from Interpol to track criminals operating from offshore tax havens. The Bench also ordered Information Technology intermediaries and digital platforms to extend full cooperation by providing call records, IP addresses, and transaction details required for investigations.

Strict SIM Card Regulations Ordered

The Court instructed the Department of Telecommunications (DoT) to ensure that telecom companies do not issue multiple SIM cards to a single person or entity, as such misuse significantly aids cybercrime operations. Strict monitoring mechanisms were directed to be put in place to prevent identity misuse in SIM issuance.

Cyber Crime Coordination Centres to Be Set Up

To strengthen inter-agency coordination, the Supreme Court directed all States and Union Territories to establish Regional and State Cyber Crime Coordination Centres, which will work closely with the CBI to swiftly investigate digital fraud cases.

Union Ministries to Submit Coordinated Action Plan

The Bench also instructed Solicitor General Tushar Mehta to ensure that the consolidated views of the Ministry of Home Affairs, the Department of Telecommunications, the Ministry of Finance, and the Ministry of Electronics and Information Technology are placed before the Court to formulate a comprehensive national policy framework to combat cyber fraud.

Over ₹3,000 Crore Extorted Nationwide

Earlier, on November 3, the Supreme Court expressed shock at the scale of digital arrest scams, noting that more than ₹3,000 crore has allegedly been extorted from victims across the country. The Court examined two sealed-cover status reports submitted by the Ministry of Home Affairs and the CBI, and decided to adopt a zero-tolerance, “iron hand” approach to such crimes.

All Police Agencies Empowered to Freeze Accounts

The Apex Court made it categorically clear that all States, Union Territories, and the CBI are fully empowered to immediately freeze bank accounts involved in cyber fraud without procedural delays.