FREEZE & FLEECE SCAM: PART 3

Kerala Gramin Bank freezes school's account over Rajkot complaint after guardian pays fees of Rs 13,200

Kozhikode: The menace of indiscriminate bank account freeze is spreading like a contagious virus. Kerala Gramin Bank froze the account of a school at Chemmad in Malappuram after a guardian paid fees. The school has been pleading with the bank to withhold the disputed amount of Rs 13,200 and lift the debit freeze on the account. Its prayers are not being heard.
Early victims leaned on the courts only to realise the wheels of justice grind freezing-slow. Another group of victims has written to the Reserve Bank of India, the bank regulator.
In the concluding part of the three-part Freeze and Fleece series on account freeze, Onmanorama looks at the options before the victims. And they look bleak because no one is there to rein in anonymous police officers from anywhere in the country to send a note and overzealous banks in Kerala freeze the accounts in a jiffy.

‘Come to Rajkot with your lawyer'**
Onmanorama contacted Gujarat's Rajkot City Cyber Crime Police after finding that more than 20 accounts arbitrarily frozen in Malappuram are linked to a complaint by a resident of that city.
The police officer (9724618928) said the complainant lost Rs 1.2 crore in an online fraud but refused to share the details of the FIR or the nature of the fraud. "The man has lost Rs 1.2 crore. We will freeze accounts. You come here with your lawyer," he said and hung up. Despite calling back several times, the officer did not attend to his phone.
None of the customers whose accounts were frozen have any idea about the nature of the complaint. The banks have frozen the account based on an acknowledgment number of the complaint registered on the National Cyber Crime Reporting Portal, and not based on FIR or crime number.
Mohammed Riyas* (name changed on request), an accountant in Saudi Arabia, asked for Rs 2 lakh from his brother, a chartered accountant in Dubai. Instead of his brother, his brother's friend credited the money to Riyas's account on March 15. "That is the origin of the problem. But we did not know it until the bank accounts of almost everybody in our family got frozen and affected our relationships," he said.
To be sure, Riyas and his brothers are not into cryptocurrency trading.
After he received the Rs 2 lakh in his NRO account in Federal Bank, Riyas transferred Rs 20,000 to the account of another brother Mohammed Rasheed*, who does not use internet banking or mobile apps.
On the same day, Riyas also transferred Rs 13,200 to another brother Mohammed Raahil to pay the school fees of their twin nephews studying at National English Medium Higher Secondary School at Chemmad in Malappuram.
Since Raahil's account had the school on the 'beneficiary list', he promptly transferred the same amount to the school's account with Kerala Gramin Bank.
Raahil also transferred Rs 1,000 to his wife to meet an urgent hospital need, and Rs 500 to his sister.
Federal Bank froze all the accounts. And Kerala Gramin Bank Froze the school's account, which was its main account.
Later, Riyas bought three air tickets from Filza Travels at Malappuram's Venniyoor to bring his wife and children to Saudi Arabia for vacation. He transferred Rs 69,300 to the travel agency's bank account. Federal Bank froze the travel agency's account too, which had around Rs 9 lakh.
Fasal Rahman, who runs Filza Travels, said his agency's bank account and Riyas's account are with the same branch of Federal Bank. "The money came from the same branch. I pleaded with the bank for weeks to lift the freeze," he said.
On April 11, the bank told Fasal Rahman that it was withholding the disputed amount of Rs 69,300 he received from Riyas and unfreezing the account. "The bank always had that option but it chose not to exercise it and caused a lot of mental harassment," he said.
Kerala Gramin Bank has not yet heeded the National school's same request.
Riyas agreed to pay for the tickets again. "In my family, only my wife's account is not frozen because I did not send her money," he said.

Freeze on wheels of justice, too?
On November 22, 2022, Archana Haridas, a medical doctor who dabbles in crypto trading, moved the High Court of Kerala after Federal Bank froze her account at the direction of Telangana's cyber police. Haridas, a native of Malappuram's Vadapuram, keeps her trading account audited by spending around Rs 50,000 on a chartered accountant and pays taxes on the crypto profit. She moved the court seeking direction to the bank to unfreeze her account. Neither the bank nor the Cyber Crime Police Station at Hyderabad's Abids would share details of the case or her involvement in it.

On February 21, the Kerala High Court asked Federal Bank to file a statement on why the account was frozen. The bank did it the same day and said it was done on the direction of Telangana's Cyber Police.

On March 9, the case came up for order again. The judge directed the Federal Bank to "find out, if possible", whether the police are still investigating the case or if they had filed its final report before any competent court in Andhra Pradesh or Telangana.

The direction is strange considering the home secretary of the government of Telangana and the station house officer of the Cyber Crime Police Station are respondents in the case and the court could have asked them for an update on the case.

On March 31, the case came up for order again. The judge again directed the bank to produce documents received from the Police of Telangana and Bengaluru. He posted the case for May 30.

Yes, by March 31, Bengaluru police have also also asked the bank to freeze the account. This week, Gujarat Police too sent a note saying they are looking into the account. That means Archana Haridas's account may not be unfrozen anytime soon.

'Police should treat crypto as an asset, not harass sellers'
On March 28, junior minister of finance Pankaj Chaudhary told Rajya Sabha that the government collected Rs 157.9 crore as taxes in 2022-2023 on payments made upon transfer of virtual digital assets, that is mostly cryptocurrencies.

Replying to an unstarred question, the minister also said crypto assets are unregulated in India but the transactions are subjected to provisions of various laws such as the Prevention of Money Laundering Act, 2002, and the Income-Tax Act, 1961.

Like the government, the police should also treat cryptocurrencies as a legal asset, said dealers. "If a person buys cryptocurrencies with ill-gotten wealth, the police should go after the buyer, not the seller who may not know the source of the buyer's income. The seller can help the police by providing the buyer's PAN, Aadhaar, bank account number, phone number, and photographs," said Abdul Jabbar V H, a consultant for victims of bank account freeze.

Police can also get the IP address and devices used by the buyer from the crypto exchanges. "These details are enough for the police to catch the buyer," he said.

If a thief buys gold ornaments or clothes from a store or mall using stolen money, the police will collect CCTV footage and other details of the suspect to arrest the thief, said Jabbar. "Or will they freeze the bank account of the jewellery store and mall," he asked.

‘Banks' action illegal, RBI should intervene'
A group of victims of bank account freeze has written to the banking regulator RBI to issue specific guidelines on freezing accounts. The petitioners include daily-wager Moideen Pookootur of Malappuram whose account with Kerala Gramin Bank was frozen after he received a home loan of Rs 3.5 lakh from Kerala government-run KSFE.

"Banks are freezing accounts based on the acknowledgment number of the complaint registered on the national cybercrime portal. Banks can at least insist with the police to register an FIR before freezing accounts," said advocate Ameen Hassan of Juris Vox, who drafted the petition to the RBI.

The petition said banks were not informing customers after freezing the debit activities of an account. A teacher of the National school said many parents were transferring fees to the frozen account. "We are not able to access the money. We feel the bank is being wily here," he said.

Hassan said police were conducting no investigation after freezing the accounts and were waiting for affected parties to reach out to them. "This creates a bad impression on all digital money transactions and may adversely affect the national economic interest," the petition said.

Victims should write to cybercrime nodal officer
Cyber law expert Jiyas Jamal said victims should write to the Nodal Cyber Cell Officer of the state where the complaint is registered. "The nodal officer, who will be a high-ranking IPS officer, can direct the cyber police station officer to lift the freeze on bank accounts and withhold only the disputed money," he said. It may be a quicker way to resolve the immediate crisis than going to court. "But we are planning to file a writ in the high court seeking directions and a standard operating procedure to freeze and unfreeze accounts," said Jamal, who runs Cyber Suraksha Foundation, an NGO which gives legal support to ordinary victims of cybercrimes. "Here, the victims are bank customers whose accounts are frozen," he said.

(Freeze and Fleece series concludes. Onmanorama will continue reporting on the issue crippling people's lives. Read part 1 here: Freeze, you are being demonetised by police, banks
Read part 2 here: Account Freeze: Crypto dealer turns detective to clear his name in scam, Kerala police ignore evidence)

(**Correction: Onmanorama initially reported that Federal Bank froze the bank account of National English Medium Higher Secondary School at Chemmad in Malappuram. The school's account is with Kerala Gramin Bank. The error is regretted.)