Digital Banking Frauds And The Need For Strengthening PMLA
- IJLLR Journal
- 5 days ago
- 1 min read
Harsh Sinha, ICFAI Law School
Victor Packiam Samuel, ICFAI Law School
Introduction
The rapid advancement of technology and the widespread adoption of digital banking have revolutionized the financial sector, providing users with unparalleled convenience and accessibility. Digital banking allows customers to conduct financial transactions, access banking services, and manage their accounts seamlessly through online platforms, mobile applications, and digital wallets. With the rise of initiatives like the Digital India1 campaign, Unified Payments Interface (UPI), and increasing internet penetration, India has witnessed exponential growth in digital banking. However, along with its benefits, digital banking has also become a breeding ground for financial crimes, particularly frauds that exploit security vulnerabilities and regulatory loopholes.
Digital banking frauds encompass a wide range of illicit activities, including phishing, identity theft, unauthorized fund transfers, SIM swap frauds, malware attacks, and social engineering scams. Fraudsters employ sophisticated techniques to gain unauthorized access to personal and financial data, leading to significant financial losses for individuals, businesses, and financial institutions. Reports indicate a sharp rise in such fraudulent activities, particularly with the increasing reliance on digital transactions post-COVID-19. According to the Reserve Bank of India (RBI), digital2 payment frauds accounted for a substantial portion of total financial frauds in recent years, underscoring the urgent need for robust legal and regulatory mechanisms to combat these crimes.
While multiple laws and regulations govern digital financial transactions in India, including the Information Technology Act, 2000, the Bhartiya Nayaya Sanhita (BNS), 1860, and RBI guidelines, they are often inadequate in addressing the complexities of digital banking frauds.
