Virtual Accounts Misuse: Parliamentary Panel Demands Action

New Delhi, Feb 8 (PTI) Taking a serious view of virtual accounts being used for cyber frauds, a Parliamentary panel has asked concerned Ministries to look into the issue at the earliest and evolve a mechanism so that misuse can be checked.

The Standing Committee on Communications and IT also termed the exponential increase of cyber frauds as "alarming". It called on various ministries involved to focus on preventive measures to ensure that cyber frauds are held under check and sought to be apprised of the action taken.

The panel said that while being briefed about the various modes of cyber frauds, the MHA representatives submitted that a virtual account was one such issue that fraudsters were using for committing frauds. It was further submitted that these virtual accounts were creating problems as there was little KYC for virtual accounts.

"To a pointed query of the Committee, with regard to the necessity of virtual accounts when they were being used for cyber frauds, the representatives of Meity submitted that these accounts which were provided by leading Indian banks were used to create payment aggregator like infrastructure for financial transactions," the report said.

While these virtual accounts provided convenience in making fund payments and reconciliation, the "Ministry had noticed that these virtual accounts were used to mask the funds' trail while making payments and at present were not monitored and could evade AML/CTF mechanism."

IT Ministry also submitted that the virtual cards provided by international fintech companies serving as virtual accounts were used to egress money out of India using the VISA and Master Card network.

"Given the submissions of the various Ministries, the committee note that there is a very serious lacuna in the banking system which is being exploited by scamsters for committing online financial frauds," the committee said in its report.

Taking a serious view of the situation, the committee called upon the concerned Ministries to look into these issues at the earliest and evolve a mechanism wherein such misuse can be checked.

"The committee would like to be apprised of the action taken in this regard," it said.