DFS Secretary urges for greater collaboration among the government, regulator, public and private sector to harness the full potential of Start-up and Fintech sector in India

The workshop is an effort to build confidence and trust among the ecosystem partners by sharing of best practices and addressing key challenges in dealing cybersecurity, digital financial frauds

Heads of around 60 Fintech companies, four Fintech Associations, 23 State’s Police Departments, CBI, ED, FIU-Ind and Central Government Ministries/ Departments, Regulators and other agencies concerned participated

The Department of Financial Services (DFS), Ministry of Finance and Indian Cyber Crime Coordination Centre (I4C), Ministry of Home Affairs, jointly organised a half-day workshop with Law Enforcement Agencies (LEAs) and Start-ups and Fintech ecosystem partners, in New Delhi.  The workshop was conducted in continuation of the last interaction of Union Finance Minister Smt. Nirmala Sitharaman with the Start-up and Fintech companies on 26^th February 2024.

The interactive workshop was organised to foster strong collaboration between Fintechs and LEAs to encourage innovations, ensuring due compliance of extant rules and regulations, addressing key challenges such as cybersecurity, digital financial frauds etc., and more importantly building confidence and trust among the ecosystem partners.

Addressing the audience, DFS Secretary Dr. Vivek Joshi emphasised the contributions made by the Start-ups and Fintechs to India's high and sustained economic growth. Dr. Joshi 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.

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.

I4C, highlighted about 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.

Following points were deliberated during the proceedings of the workshop:

• Role of technology in providing accessibility to financial services
• Strategy to control the money mules
• Appointment of key contact point or nodal officer by the Fintech companies to liaise with the LEAs
• 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
• Establishing a mechanism for freezing and unfreezing of accounts for faster recovery of defrauded money
• Devising a mechanism to ensure data privacy and prevention of data theft
• 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. The workshop ended with a panel discussion comprising of LEAs for prevention and mitigation of cybercrime and financial frauds.

The workshop was attended by the Founders/ Co-founders/ Heads of around 60 Fintech companies, four Fintech Associations, 23 State’s Police Departments, CBI, ED, FIU-Ind and the Central Government Ministries/ Departments, Regulators and other agencies concerned such as Ministry of Electronics and Information Technology (MeitY), Department of Telecommunications (DoT), Department for Promotion of Industry and Internal Trade (DPIIT), Reserve Bank of India (RBI), Pension Fund Regulatory and Development Authority (PFRDA), Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI), National Payments Corporation of India (NPCI), Business Correspondent Federation of India (BCFI), and I4C etc.

 

Fintech-law enforcement collaboration to strengthen cybercrime prevention, real-time monitoring, and expedited account freezing for fraud mitigation. The workshop set out coordinated public-private measures for combating cybercrime and digital financial frauds, urging Fintech-LEA collaboration, development of an indigenous AML and transaction-monitoring system, and operational steps including appointment of a nodal officer, real-time data monitoring, geotagging of transactions, creation of a suspicious registry, regular digital KYC audits, and protocols for freezing and unfreezing accounts to expedite recovery.