FinMin considers mandating
nodal officers for banks and fintechs
Finance Ministry is toying with the idea of requiring banks and
fintechs to appoint nodal officer or key contact point to liaise with the Law
Enforcement Agencies (LEAs).
This issue was discussed at a half-day workshop jointly organised
by the Department of Financial Services (DFS) in the Finance Ministry and the
Indian Cyber Crime Coordination Centre (I4C) in the Home Ministry with LEAs,
startups and fintech ecosystem partners in the capital on Tuesday.
The interactive workshop also saw discussions around frauds being
perpetrated through mule accounts, fintech merchant abuse etc.
Main objective
The objective of the interactive workshop was to foster strong
collaboration between fintechs and LEAs to encourage innovations, ensure due
compliance with extant rules and regulations, address key challenges such as
cyber-security, digital financial frauds etc and more importantly building
confidence and trust among the ecosystem partners.
This workshop was conducted in continuation of the last
interaction of Union Finance Minister Nirmala Sitharaman with the start-up and
fintech companies on February 26, 2024.
Addressing the workshop, DFS Secretary Vivek Joshi emphasised the
contributions made by the start-ups and fintechs to India's high and sustained
economic growth. He urged for greater collaboration among the government,
regulator, public and the private sector to harness the full potential of
start-up and fintech sector in India.
He emphasised that fintechs are more technology and
innovation-oriented and they draw the traction of the regulators and LEAs when
they grow their businesses over a period of time.
The I4C highlighted mule accounts, ATM hotspots, hotspot branches,
fintech merchant abuse etc through its Citizen Financial Cyber Frauds Reporting
and Management System (CFCFRMS).
It was emphasised that an indigenous transaction monitoring and
Anti-Money Laundering (AML) system catering to Indian fraud and crime scenario
may be developed by the fintech companies.
Issues discussed
The points that were deliberated during the workshop include the
role of technology in providing accessibility to financial services; strategy
to control the money mules; real-time monitoring of data infringement by both
the fintech companies and LEAs; geotagging of digital transactions to track the
money trails; creation of suspicious registry of BCs and fraudsters involved in
the financial frauds; conducting regular audits of digital KYC for fostering trust
and accountability and establishing a mechanism for freezing and unfreezing of
accounts for faster recovery of defrauded money.
Other issues discussed include devising a mechanism to ensure data
privacy and prevention of data theft; and modernisation of digital
infrastructure by leveraging technologies like IPv6, API integration etc.
The insights focused on emerging trends of cybercrime and
financial frauds were provided by Gujarat, Haryana and Uttarakhand State Police
Departments along with I4C.
While the Fintech Associations presented the operational
modalities and key challenges faced by the fintech companies, the LEAs from the
states shared their best practices on curbing cybercrime and financial
frauds.
The workshop was also attended by Heads of around 60 fintech
companies, four Fintech Associations, 23 State Police Departments, Central
Bureau of Investigation (CBI), Enforcement Directorate, FIU-Ind and the Central
Government Ministries/ Departments, Regulators and other agencies concerned.
www.thehindubusinessline.com
dt. 02.05.2024