INDIA Trends and Developments Contributed by: Nishant Joshi, Kunal Singh, Palash Bhatkoti and Vikalp Wange, Shardul Amarchand Mangaldas & Co.
Shardul Amarchand Mangaldas & Co. Amarchand Tower 216, Okhla Industrial Area Phase-III, New Delhi - 100 020 India Tel: +91 114 159 0700; +91 114 060 6060 Email: nishant.joshi@amsshardul.com Web: www.amsshardul.com
Introduction The convergence of rapid technological advancement and an increasingly digitised financial ecosystem has given rise to nuanced financial crimes that are not only sophisticated in design but also expansive in reach and deeply exploitative of human vulnerability. What was once the domain of elementary fraud has evolved into a complex landscape of impersonation, synthetic content manipulation and organised digital extortion, posing challenges to individuals, institutions and regu - lators alike. India’s response to this evolving threat has been multifaceted, encompassing the deployment of technology-oriented countermeasures and a funda - mental overhaul of its legislative architecture. The Indian courts have, in recent times, taken a proactive, anchoring role in combating sophisticated financial fraud. This chapter examines three defining trends in this domain: • firstly, the innovative misuse of technology in the commission of modern financial crimes and the suite of technology-driven tools established by the government to detect and mitigate such crimes; • secondly, the evolution of India’s legislative frame - work to ensure that the legal regime keeps pace with the rapidly shifting realities; and • thirdly, the progressive role played by courts in dealing with such evolving crimes.
New Financial Crimes and Measures (Technological and Legislative) Put in Place by the Government for Mitigation While fraud itself is not a novel phenomenon, the tools and methods deployed by criminals to commit such crimes have evolved. What renders these mod - ern methods particularly effective is not technology alone, but its deliberate exploitation of basic human instincts – ie, trust, deference to authority and the aspiration for financial betterment. In effect, criminals prey on optimism and manufacture urgency to bypass rational caution, thus trapping even the well-educated and vigilant. New types of financial fraud Set out hereinbelow is a brief overview of modern financial fraud and the modus operandi typically adopted by perpetrators. Fintech and Unified Payments Interface ( UPI ) fraud The widespread adoption of digital payment systems, particularly the UPI in India, has given rise to a distinct category of payment fraud, where fraudsters exploit vulnerabilities inherent in these systems with the objective of causing financial loss to the unsuspect - ing public. Some common types of fraud under this category are refund fraud, phishing fraud and fraud by impersonation. In most of these cases, fraudsters use fabricated transaction screenshots, advanced technology or malicious mobile applications to mis - guide people and gain possession of their credentials, personal details, etc, for the sole purpose of initiating unauthorised transactions or siphoning funds from the compromised accounts for their own financial gain.
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