Ahmedabad Trader’s Account Frozen from Multiple States for Receiving Money in 10th-Layer Transaction in Cyber Frauds

Kushagra Tiwari, Ahmedabad: Arvind Rathi, proprietor of the wholesale firm Arvind Garments based in the Gheekanta area of the city, is facing a severe operational limbo after his primary ICICI Bank current account was frozen due to minor liens linked to cybercrime investigations across three states.

Despite the disputed amounts totalling less than ₹15,000, the trader remains locked out of his main business account, underscoring the growing logistical burden on legitimate merchants caught in automated cyber-fraud investigations.

Three States, Three Liens

The issue stems from police notices sent to ICICI Bank, following which liens were marked on Rathi’s account. According to bank communication, Rathi now must secure No Objection Certificates (NOCs) from police authorities in three separate jurisdictions to unfreeze his funds:

• Karnataka: ₹6,200 linked to an “Internet Banking Related Fraud” complaint in Bangalore City North
• Maharashtra: ₹6,200 tied to a “Trading Fraud” probe by Mumbai City Cyber Police
• Telangana: ₹1,700 connected to a “Business and Investment Fraud” case in Cyberabad, reportedly involving a WhatsApp-based scam

‘10th Layer’ Classification

Talking to DeshGujarat, Rathi stated that, as per the bank, he has been classified as being in the “10th layer” of these fraud cases. This means that the disputed money passed through nine other accounts before reaching Arvind Garments.

Such transactions are common in wholesale trade, where payments are routinely received via UPI and NEFT from multiple retail clients. Rathi, who deals in kids’ wear and operates largely across Gujarat and Rajasthan, said he has submitted tax invoices and bank statements to establish the legitimacy of his transactions.

“Even though I have done nothing wrong, I do not care about the small amount of money; if the authorities want to keep it in lien till the investigation is over, that is fine. But why do I have to travel to three cities when I have not done anything wrong?” he said.

He added that being the sole proprietor makes it difficult to leave operations unattended. “It is not feasible for me to travel to Bangalore, Hyderabad, and Mumbai for such minor amounts,” he said.

He added that he has been using this current account for many years and, although he has opened another account in a different bank to facilitate business operations, it is neither possible nor feasible to inform every party, which already has his ICICI Bank account details, to reroute payments. Explaining the situation, he stated, “We do not receive large sums of money, but our customer base is huge, leading to a higher number of transactions, though of smaller amounts.”

Limited Relief from Bank, Procedural Hurdles

Rathi expressed frustration over the lack of effective local support. While ICICI Bank informed him that his request has been given “priority status,” the matter remains unresolved. He alleged that branch officials continue to cite procedural limitations, stating that the issue is “not in their hands.”

When he approached local police in Shahibaug, he was reportedly advised to either hire a lawyer or travel to the respective states to resolve the cases.

In an effort to move forward, Rathi contacted authorities in Karnataka and Telangana. According to him, Bengaluru police told him he must appear in person at the police station where the case is registered and submit three months’ bank statements along with Aadhaar and PAN documents. His request to submit documents via email was declined.

He also faced communication challenges while contacting Cyberabad police, where, he said, officials were unable to communicate in Hindi or English, making it difficult to seek resolution.

Understanding the ‘Layer System’

The “Layer System” is used by law enforcement agencies and banks to classify accounts based on how funds move through a cybercrime network. It helps investigators trace the flow of money across multiple accounts, often involving unsuspecting intermediaries, to identify the source and beneficiaries.

• Layer 1: Direct recipient of funds from the cybercriminal
• Layer 2: Accounts receiving funds from Layer 1
• Layer 3 and beyond: Subsequent recipients further down the chain

Even if an account holder is unaware of the origin of funds, they may still be classified within this chain. For example, Rathi was categorised as being in the “10th layer,” meaning the disputed funds passed through nine other accounts before reaching him.

Legal Position on Account Freezes

Rathi’s struggle reflects a broader legal issue earlier addressed by the Madras High Court in the case of Mohammed Saifullah vs Reserve Bank of India (September 2024).

In that ruling, the Court criticised the practice of “unilateral orders of account freezing,” noting that they sever the “life-line of the business” and cause significant damage to a citizen’s financial life before they even realise why the account was frozen.

The Court categorically held that “order freezing the entire account without quantifying the amount and period cannot be passed,” as such actions violate the fundamental rights of trade and business. The precedent suggests that banks should place a lien only on the specific suspected amount rather than impose a blanket freeze on the entire account, allowing legitimate business operations to continue.

Broader Implications

Rathi’s case reflects a wider pattern affecting traders and small businesses across India, where accounts are flagged in multi-layered cybercrime investigations despite account holders being far removed from any alleged wrongdoing.

His experience highlights the procedural burden placed on individuals required to navigate multiple jurisdictions for relatively small disputed amounts. It also raises questions about the proportionality of enforcement mechanisms, especially when legitimate business activity is disrupted.

Rathi said his intention in speaking out is to draw attention to the issue faced by others in similar situations.

His case illustrates the challenges faced by traders caught in complex financial tracking systems, where compliance requirements can translate into significant operational and logistical strain, even in cases involving minimal sums. DeshGujarat