KATHMANDU, Oct 15: Nepal Rastra Bank (NRB) has directed banks, financial institutions and payment service providers to designate contact persons available round the clock to help combat cyber fraud and prevent stolen funds from being moved during the long Dashain, Tihar and Chhath holidays.
The arrangement aims to speed up the sharing of suspicious transaction details, identify accounts used in fraud and prevent the transfer or withdrawal of stolen money.
In a notice issued on Wednesday, the central bank asked banks, financial institutions, payment system operators and payment service providers to submit the names, designations and mobile numbers of designated contacts, along with email addresses monitored 24 hours a day. The details must be forwarded to the Nepal Police Cyber Bureau.
Although regular banking services may be limited during the holidays, digital transactions continue. The NRB expects the arrangement to enable faster coordination to identify and freeze suspicious accounts and support police investigations. Stakeholders report that police receive around 200 to 300 complaints related to financial fraud daily.
Delays
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Delays in freezing funds remain a major obstacle to recovering money lost to cyber fraud. By the time victims report incidents, fraudsters may have transferred the money through multiple bank accounts and withdrawn it.
Victims must currently notify their banks and file complaints with the Cyber Bureau. Authorities then need to coordinate with other banks involved in the transactions to freeze the funds, creating delays that give fraudsters time to move or withdraw the money.
To address these challenges, Nepal Police has initiated the process of establishing an Anti-Scam Centre involving the NRB, banks and financial institutions, payment service providers, internet service providers and telecommunications companies.
According to the NRB, the proposed centre will facilitate rapid coordination among relevant agencies to identify suspicious accounts and transactions, initiate action to freeze funds, and coordinate action against phone numbers and websites used in fraud.
The centre is being planned as a separate structure from the Cyber Bureau, with the aim of enabling the immediate exchange of transaction details as soon as a fraud report is received.
The NRB said the proposal had been approved by the Ministry of Home Affairs. If the Ministry of Finance approves the budget, the centre is expected to begin operations within a month. Once its systems are developed, coordination and service delivery are expected to operate without requiring representatives to be physically present.
AI
Sushil Poudel, an NRB representative involved in discussions on the proposed Anti-Scam Centre, has suggested using artificial intelligence (AI) to speed up the return of money lost to cyber fraud.
Poudel said AI could help analyse and assess similar cases, given the lengthy and cumbersome process of conventional court proceedings.
Fraudsters often contact victims by phone, through social media or other channels, using false promises, deception or threats to obtain money. Even people familiar with digital financial services fall victim, while limited technological and financial literacy further increases the risk.
However, using AI in fund recovery would require safeguards to protect legal rights, ensure the reliability of evidence, uphold victims' right to be heard and allow decisions to be reviewed. While AI could assist with data analysis and preliminary assessments, human oversight and legal accountability for judicial decisions would remain essential.
Section 52 of the Electronic Transactions Act, 2006, provides for recovering money obtained through technological fraud from the offender. However, the legal provision alone is not enough. Promptly freezing fraudulent funds and establishing a transparent, efficient process to verify claims and return money to victims are equally important.
Implementation
The effectiveness of the NRB's directive and the proposed Anti-Scam Centre will depend on how quickly banks and service providers respond to fraud reports, suspicious funds are frozen and victims can recover their money.