When Can The Police Freeze Bank Account In Relation To Cyber Financial Crimes

Author: LawSphereX

Category: Criminal Law

Published: 2026-08-23T21:42:39.347448+00:00

Updated: 2026-08-30T07:13:13.284Z

WHEN CAN THE POLICE FREEZE BANK ACCOUNT IN

RELATION TO CYBER FINANCIAL CRIMES?

Advocate Bharti Rao Cybercrime is defined as any illegal action that involves the use of a computer, communication device, or computer network to carry out or facilitate a crime. However, it is not defined under any section in Information Technology Act (IT) of 2000. Further, there are various types of Cyber Crimes that entail utilizing computers to distribute malware, disseminate unlawful information, and execute other criminal activities. Some of them are listed below: • Credit card fraud or debit card fraud – credit card or debit card fraud involves the unauthorized use of someone else’s credit or debit card information to make purchases or withdraw funds. • Impersonation and identity theft - Impersonation occurs when a person pretends to be someone they are not.

On the other hand, identity theft involves using found—or, in many cases, stolen—pieces of someone's identifying information to impersonate that individual. • Data breach – a data breach refers to an incident where unauthorized individuals gain access to and expose sensitive or confidential personal and corporate data. • Phishing - Phishing is a type of fraud that aims to steal personal information, including Customer ID, IPIN, credit or debit card numbers, card expiry dates, and CVV numbers. This is typically done through emails that look like they are from legitimate sources. • Cyber stalking – when someone uses the internet and other technologies to harass or stalk another person. • ATM Skimming ATM skimming is when hackers use devices to steal info from cards at ATMs. They put a sneaky device on the machine that secretly takes the card info and PIN when someone uses it.

• Cyber bullying, etc. – bullying with the use of digital technologies, that takes place on social media, messaging platforms, gaming platforms and mobile phones. With the swift digital transformation of banking operations, the banking sector has become a prime target for cyber-criminals. This results in financial losses not only for customers but also for the Banks, ultimately impacting the economy of a nation. The impact of cybercrime on banks includes not just financial losses, but also operational interruptions, damage to reputation, erosion of customer trust, and systematic risks. Consequently, banks have implemented a thorough strategy and have enacted stringent technical measures in collaboration with law enforcement and Regulatory Agencies. One of the most common and fundamental measures used by the Regulatory Agencies is freezing the Bank Accounts for crime-related reasons.

An account may be frozen due to suspected fraud involving third-party transactions, a court order, money laundering, or failure to pay debts, among other factors. Further, the Regulatory Agencies especially the Police Officials puts a Lien/Debit Freeze on the Bank Accounts which are involved or under the suspicion of Financial Crimes under the provisions of Section 106 of BNSS. Typically, when an account is frozen, the account holders are unable to withdraw funds as debit transactions for withdrawals, purchases, or transfers are declined. However, they are still permitted to deposit money into the account. In a similar manner, a lien may be imposed on a bank account in cases of cyber-crime to put a halt or restrict access to a specific amount or funds that are believed to be linked to fraudulent activity.

The difference between a bank account debit freeze and bank account lien is that a bank account freeze is a precautionary measure taken when a bank suspects illegal/suspicious activity, often without prior notice. In contrast, a bank places a lien on a customer’s account after obtaining a judgement that allows them to claim the funds in the account if the customer defaults on their obligations. There are several provisions that enable the freezing of bank accounts and the imposition of liens. For instance, Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) grants police the authority to seize property that is suspected of being stolen or linked to criminal activity, which encompasses bank accounts.

Police Authorities are granted sufficient powers to seize an accused person's bank account during their investigation under Section 106, as bank accounts fall under the definition of ‘property’, as established by the Hon’ble Supreme Court in the case of “State of Maharashtra v. Tapas D. Neogy”. The Court has outlined two conditions that must be met for this restriction to apply:

1. There must be a "Property"; and

2. There must be a suspicion of the commission of an offence concerning that "Specific

Property". In addition, the Madras High Court has determined that the investigating agencies are only permitted to freeze the amount of money involved in the suspected fraud. Nonetheless, Section

102 of the CrPC has been substituted with Section 106 of the Bharatiya Nagarik Suraksha

Sanhita (BNSS), which requires the police to notify the jurisdictional Judicial Magistrate regarding any property seizures. Another section of Bharatiya Nagarik Suraksha Sanhita (BNSS)is Section 88, which grants police officers to attach any property during an investigation, (any property also includes bank accounts), this allows authorities to freeze accounts suspected of holding funds related to criminal activity. REMEDIES AVAILABLE: Aggrieved party can seek the removal of these liens or have their bank accounts unfrozen by submitting a petition to:

1. Investigating authority

2. Magistrate

3. High Court

RELEVANT JUDGEMENTS: The Hon’ble Supreme Court in its landmark judgement, Teesta Atul Setalvad held that “at an appropriate stage or upon completion of the investigation, if the Investigating Officer is satisfied with the explanation offered by the Appellants and is of the opinion that continuance of the seizure of the stated bank accounts or any one of them is not necessary, he will be well advised to issue instruction in that behalf. ” If the investigating authority does not provide relief, the aggrieved party can approach the concerned Magistrate under Section 451 or 457 of the CrPC. Further, the aggrieved party can go to the Hon’ble High Court, if the Magistrate does not grant relief.

Further, the Courts have also on several occasions permitted the de-freezing of bank accounts under the condition that the affected party executes a bond for the amount in question before a Magistrate and provides that amount, if directed to do so by the Magistrate. Section 457 of the Criminal Procedure Code (CrPC) grants the Magistrate the authority to return the seized property to the rightful owner. An application for the de-freezing of a bank account can also be made under Section 457 of the CrPC, now under Section 503 of Bharatiya Nagarik Suraksha Sanhita (BNSS). When deciding on a motion to de-freeze the account, the Magistrate only needs to consider two factors: (i) whether the initial seizure was lawful and (ii) whether the account has any connection, close or direct, to the alleged offences. In “Madhu v.

Sub Inspector of Police”, the Hon’ble Kerala High Court stated that a Petitioner can approach the High Court itself “if the freezing is per se contrary to the provisions of law and could be assailed as illegal without reference to factual disputes involved in the matter. ” The Writ Jurisdiction of the High Courts can be invoked based on violations of the Right to Livelihood under Article 21 of the Constitution, or if the seizure of property is arbitrary and therefore violates Article 14. However, since writ jurisdiction is considered an extraordinary remedy, the court may dismiss such a writ petition on the grounds that there is an effective alternative remedy available under Sections 451 and 457 of the Criminal Procedure Code (CrPC), now Section 497 and Section 503 of Bharatiya Nagarik Suraksha Sanhita (BNSS).

In such cases, the court may also direct the petitioner to approach before the concerned Magistrate under these Sections instead of hearing the matter on its merits. Furthermore, depending upon the circumstances, the Court may also deny a request for de- freezing a bank account, if it believes that doing so would hinder the Investigation or if the Investigation is still ongoing.

CONCLUSION

Cybercrime refers to illegal activities that involves the use of a computer, communication device, or network to commit or facilitate various crimes. The Banking Sector is a prime target for cyber-criminals, leading to significant financial losses for both customers and banks, which in turn affects the economy of the country. In response, Banks have implemented strict technical measures in collaboration with law enforcement and regulatory agencies. These measures include freezing bank accounts or putting a lien on the stolen amount suspected of being involved in criminal activities and imposing liens on accounts connected to financial crimes. According to Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), police have the authority to seize property suspected of being stolen or linked to criminal activity, including bank accounts.

Individuals who feel aggrieved by such actions can seek the removal of liens or the unfreezing of their bank accounts by submitting a Petition or Application to the relevant Investigating Authority or before the concerned Magistrate or High Court.