What is the DoT’s New Financial Fraud Risk Indicator (FRI)? How Can it Combat Cyber Fraud and Financial Crimes

The Department of Telecommunications (DoT) has launched a new tool to combat cyber fraud and financial crimes. Named the Financial Fraud Risk Indicator (FRI), this tool is part of the Digital Intelligence Platform (DIP). It aims to provide early warnings about mobile numbers that might be linked to fraudulent activities.

Financial institutions and digital payment platforms will now receive FRI alerts from the DoT. These alerts, derived from a comprehensive analysis of multiple data sources, are designed to help stakeholders evaluate the fraud risk associated with mobile numbers before transactions occur.

Understanding the Financial Fraud Risk Indicator

The FRI categorises mobile numbers into three risk levels: Medium, High, or Very High. This classification relies on several inputs, including cases reported through India's National Cybercrime Reporting Portal (NCRP), data from DoT's Chakshu platform, and intelligence gathered from banks and financial institutions.

These alerts enable banks, non-banking financial companies (NBFCs), and UPI service providers to exercise caution when dealing with high-risk numbers. The DoT's Digital Intelligence Unit (DIU) also distributes a Mobile Number Revocation List (MNRL), detailing numbers disconnected for reasons such as incomplete re-verification. Many of these numbers are associated with financial frauds.

Integration with Financial Platforms

PhonePe was among the first platforms to adopt the FRI system. The company blocks transactions linked to "Very High" risk numbers and displays alerts via its PhonePe Protect feature. For "Medium Risk" numbers, PhonePe is developing pre-transaction warnings.

Other major UPI platforms like Paytm and Google Pay have also started incorporating FRI alerts. These platforms process over 90% of UPI transactions in India. They use risk data from DIP to delay transactions, issue alerts requiring user confirmation, and reduce fraud attempts.

DoT's Objective and Future Outlook

The DoT aims to prevent telecom resource misuse through technology-driven solutions. By collaborating closely with digital payment firms and financial institutions, the department seeks to create a secure telecom environment.

The integration of FRI into user-facing systems could become an industry standard practice. This would enhance the resilience of India's digital financial infrastructure, according to DoT.

Banks are also utilising this information to bolster their internal fraud detection mechanisms. The FRI provides advance warnings about potentially risky mobile numbers. Once flagged by any stakeholder, the DIP system conducts an in-depth analysis and assigns a fraud risk level, which is then shared promptly with all stakeholders.