KYC verification is not done properly in banks. This leads to significant vulnerabilities. Such vulnerabilities can promote cyber fraud by colluding with cyber criminals. This inadequate process often results in the failure to properly identify clients. It also fails to verify them, allowing malicious actors to exploit these gaps for illicit gains. Banks face pressure to streamline operations. Thorough KYC verification is crucial. It serves as a critical barrier against financial crime. Furthermore, the absence of stringent checks allows shady activities to thrive. This undermines customer trust and the overall stability of the financial system. Implementing robust KYC protocols is essential. These protocols are crucial in protecting institutions and their clients. They guard against the ever-evolving threats of cyber crime.

1. Core Allegation and Grievance in matter of KYC Verification fraud

The complainant, through the investigating police officer, alleges that:

• Banks (specifically Federal Bank accounts) opened accounts for individuals (Mohammed Aamir, Nayan Biswas, Mrs. Rinku Singh, and mobile user Mohd. Qasim) without proper KYC verification.
• Cyber criminals use these poorly-verified accounts for fraudulent transactions. This suggests collusion or gross negligence. Such neglect facilitates organized crime.
• The Reserve Bank of India (RBI), as the regulatory body, must take action. It should impose penalties on the banks that failed to comply with KYC norms. These norms include the RBI’s KYC Master Directions and the Prevention of Money Laundering Act, 2002.

2. Status and Action Taken in KYC Verification fraud

Police Investigation

• Investigating Officer (Inspector Arvind Kumar Yadav) registered the case.
• The officer traced specific bank account numbers (Federal Bank A/c No. 15910200006073 and another A/c No. 50210037427541) and mobile numbers associated with the alleged fraud.
• Conclusion: The investigation was closed. The investigation of the above case is being stopped due to the officer’s inability to trace the fraudulent elements. There is a lack of information about the persons who committed fraud, despite “a lot of efforts.”

CPGRAMS Grievance (DEABD/E/2025/0061111)

• Filed against: Reserve Bank of India.
• Date of Receipt: 25/07/2025.
• Initial Action (31/07/2025): The grievance about fraud in KYC Verification was closed.
  • Remarks: RBI stated they took “appropriate steps” but were unable to disclose account details to a third party (privacy/confidentiality rule). They confirmed the bank will cooperate with the police investigation and provide details upon request.
• Complainant’s Response: Not Resolved; Reason: “Sent to other department without resolution.”
• Rating Remarks: Expresses strong dissatisfaction. It alleges “incompetent police personnel and irregularities.” It reiterates that the RBI must take action against banks that opened fraud-facilitating accounts without proper KYC.

3. Appeal and Jurisdictional Dispute

Appeal (DEABD/E/A/25/0010380)

• Date of Receipt: 01/08/2025.
• Appeal Text: Challenges the RBI’s handling, specifically asking:
  • Why did RBI forward the grievance to Federal Bank? The core issue (KYC non-compliance) requires regulatory action by the RBI, not resolution by the “guilty bank.
  • The transfer suggests a lack of jurisdiction, deflection of accountability, or ulterior motive by the RBI.RBI overlooked KYC Verification fraud through such cryptic dealings.

Current Appeal Status

• Current Status: Appeal Received.
• Officer Concerns To:Ms. Shalini Warrier (Chief Operating Officer, FEDERAL BANK LIMITED).
  • Note: This confirms the appeal or the grievance was indeed transferred to the Federal Bank. This is the point of contention for the complainant.

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4. Key Regulatory and Legal Context in matter of KYC Verification fraud.

The complainant correctly cites the regulatory framework:

• KYC Mandate: Opening a regular bank account without proper KYC is a breach of:
  • RBI’s KYC Master Directions.
  • Prevention of Money Laundering Act (PMLA), 2002.
  • Banking Regulation Act, 1949.
• RBI’s Power: The RBI has the jurisdiction to penalize banks for:
  • Failing to obtain valid documents.
  • Not conducting proper customer due diligence.

First, the grievance is a cyber fraud complaint. This falls under police matter. Then it becomes an allegation of systemic regulatory failure, which is RBI’s jurisdiction. This change occurs due to the suspected KYC lapse by the Federal Bank. The complainant believes the RBI is trying to sidestep the issue by transferring the complaint to the bank itself.

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Grievance Reference: DEABD/E/2025/0061111 Date of Resolution: 30 July 2025 From: PNO Desk – Service Quality Department, The Federal Bank Limited

Saranya Sasidharan PNO Desk Is misleading the victim in the matter by reaping the loopholes of the government. Government is supporting KYC Verification fraud and resulting cyber crimes by not not taking action against offenders.

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Thanks & Regards

Saranya Sasidharan PNO Desk – Service Quality Department The Federal Bank Limited

Leniency of police, RBI and banking institutions are causing steep hike in the cyber-crime in the country and executives are mute spectators

Federal bank says that victim is a third party