The Employees’ Provident Fund Organisation (EPFO) has issued a Standard Operating Procedure (SOP) for freezing or de-freezing of Employees Provident Fund (EPF) accounts to mitigate the risk of fraud. As per its 2021-22 annual report, EPFO had 27.74 crore EPF accounts. Let’s understand these EPFO New Guidelines in detail.

Its December 22, 2023, DOP is aimed at reducing fraud during EPF account withdrawals. EPFO organization offers the Employees Provident Fund (EPF), Employees Pension Scheme (EPS), and Employee Deposit Linked Insurance (EDLI). The SOP outlines a time-bound methodology to freeze member IDs (MID) and Universal Account Numbers (UANs), identify and freeze accounts for verification, and de-freeze them when genuineness is ascertained.

EPFO in its circular said, “A precautionary verification mechanism is a prerequisite to mitigate risks involved because of possible frauds, impersonation, and forgery. The first and foremost action would thus be to protect the capital or its flight from an account. Thus, it is imperative to freeze some or all of the operations in respect of MIDs/UANs/Establishments, where there is a chance of fraudulent withdrawal or an attempt to fraud or having committed the fraud.”

Also Read: EPFO Extends Deadline To Upload Details By Employers For Higher Pension Option Till Dec 31

What Is The Time Frame For Verification?

In the EPFO New Guidelines, they have set a verification time limit of up to 30 days for frozen accounts, extendable by 14 days for investigation and due diligence. Once the due checks are completed and found to be in order, the frozen account will be de-freezed.

According to the SOP, multiple verification layers must be followed to mitigate fraud risks and secure funds. The process of freezing and de-freezing is initiated in cases of potential fraudulent transactions. The account will be frozen within the specified time frame for verification to determine the genuineness of the transaction. Corrective measures will be taken to recover the funds in case of irregularities, such as fraudulent withdrawals.

In a fraudulent case, criminal proceedings will be initiated against the person responsible, and field offices will be held accountable for any lapses. It also reads that funds fraudulently withdrawn will be returned, along with interest, to the genuine EPFO member’s account.

The SOP aims to safeguard members’ accounts from deceptive activities, protect funds in rightful accounts, and address systemic issues. It issued advisories on August 18, 2021, to ensure compliance and mitigate erroneous or wrong payments. The organization also outlined the modus operandi followed for such fake withdrawals.