Supreme Court Directs WhatsApp and Financial Institutions to Outline Cyber Fraud Preventive Measures

The Supreme Court has asked WhatsApp and other intermediaries to apprise the court about their proposed measures to prevent digital arrest scams and related cybercrimes in the country.

In an order regarding a hearing conducted on October 29 in a suo motu case titled 'In Re: Victims of Digital Arrest Related to Forged Documents', a bench headed by Chief Justice of India Surya Kant asked WhatsApp and like intermediaries to simultaneously submit their proposals to the Indian Cybercrime Coordination Centre (I4C). The bench, which also includes Justices Joymalya Bagchi and V Mohana, has listed the plea for further consideration on November 23.

During the hearing, senior advocate Kapil Sibal, appearing for WhatsApp, stated that the platform had taken preventive measures, including action against 9,400 accounts, and would file an affidavit detailing these steps. He added that the platform was working on software to identify suspicious accounts and warn users.

The top court noted that financial institutions must be held accountable for digital arrest scams and other cyber frauds. The bench emphasized that banks should be required to compensate victims for losses suffered where an investigation establishes that the fraud occurred due to the institution's failure to exercise due diligence. The regulatory measures proposed by the Reserve Bank of India (RBI) must mandate provisions requiring financial institutions to indemnify victims and pay suitable compensation, not less than the amount lost, when due diligence fails.

The Chief Justice questioned why banks could not intervene when customers suddenly attempted to transfer unusually large sums of money inconsistent with established transaction patterns. Preventive safeguards suggested by the court include temporarily suspending unusual or suspicious transactions, automatically intimating such transactions to the nearest police station, and subsequently physically verifying the reported transactions.

To ensure effective implementation, the bench directed the RBI to submit a list of all authorized financial institutions before the court on the next date of hearing. The court noted that although cybercrimes fell by 50 percent, victims still lost Rs 800 crore so far this year. The bench will examine the proposed RBI Know Your Customer (KYC) Amendment Directions, 2026, before permitting the regulatory process to proceed. These directions are proposed to be notified by November 30 and operationalized by December 31.

Attorney General R Venkataramani, appearing for the Centre and other authorities, informed the bench that substantial work had been undertaken to improve the detection of suspicious transactions and strengthen preventive mechanisms within the banking system.

Additionally, the bench directed law enforcement agencies of all states and Union territories to submit reports detailing FIRs registered in digital arrest scam cases, along with investigations arising from them. The Director Generals of Police (DGPs) across all states and Union territories have been directed to ensure compliance.

"The recent Supreme Court directives mark a critical shift toward stricter institutional accountability in India's digital ecosystem. By placing greater responsibility on financial institutions and communication intermediaries like WhatsApp, the judiciary is addressing the core vulnerabilities exploited in cyber frauds. For businesses, fintechs, and digital platforms, this underscores the urgent need to integrate robust real-time monitoring and proactive compliance mechanisms to protect users and mitigate emerging financial risks." — Dr. Shishir Gupta, Founder & CEO, StartupLanes