Most of the Indian banks appears to be on the quest to get the validity from the RBI as they want to freeze the finance that are used in channelling illicit transactions.
It seems that the banks can now freeze or woodcut finance based on internal triggers.
Notably, the banks do not have the validity to freeze or woodcut consumer finance without proper authorisation from a magistrate or law enforcement agencies (LEAs), equal to the provisions of the Prevention of Money Laundering Act (PMLA).
In this regard, a working group constituted by the Indian Banks’ Undertone said, “In light of this, we may propose this as a suggestion for remoter consideration by the RBI.”
Why Would This Happen?
So far money laundering remains one of the most significant threats to financial ecosystems worldwide.
It appears that the money mule finance play a hair-trigger role in disguising the origins of illicit funds among the tools employed by criminals.
The IBA said that to minimise attempts of cyber fraud, banks should be given the validity to freeze and woodcut fraudulent accounts.
With this permission, the validity will moreover indulge banks to save crucial time in seeking permission from authorities.
Here mentioned mule finance are used by the fraudsters to move illegal funds through the financial system.
Further, these finance are stuff used by scammers to launder money, often without the knowledge of the person under whose name the worth has been opened.
As informed by the banks, they freeze thousands of these finance every year.
But, fraudsters quickly create new finance using loopholes in the system.
The banks may squint to verify and restrict finance most vulnerable to misuse as “mule” finance for channelling illicit money as mentioned in the report.
How Does This Freezing Finance Helps?
For doing so, banks have proposed using the Election Commission database to verify individuals who unshut finance using voter identification cards.
Moving ahead, they have suggested using Form 60in the sparsity of a permanent worth number, or PAN.
Further proposing to cap the number of transactions on such accounts.
In a fight versus mule accounts, they will have to be dynamic, technology-driven approach.
Banks can write existing gaps, visualize criminal strategies, and protect the integrity of the financial ecosystem, the undertone suggested with the integrating of Artificial Intelligence (AI) and Machine Learning (ML) into transaction monitoring systems.
The stakeholders are likely to make a well-matured effort and invest in technology, staff training, and collaboration in order to secure a safer financial environment.
Implementing these measures will require dedication and cooperation from financial institutions, regulators, law enforcement agencies and technology providers, said IBA.
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