In a major crackdown on cybercrime, the Centre has successfully frozen approximately 450,000 “mule” bank accounts over the past year. These accounts are often exploited by cybercriminals to launder funds obtained through fraudulent activities, and they are typically used to transfer stolen money across various financial institutions. A report by The Indian Express reveals that while mule accounts are distributed across several banks, the highest concentration has been found in institutions like State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank.
The Indian Cyber Crime Coordination Centre (I4C), operating under the Ministry of Home Affairs, discussed the extent of this issue in a recent meeting with the Prime Minister’s Office (PMO). In this meeting, officials explained the vulnerabilities within the banking system that cybercriminals are exploiting, using “mule accounts” for laundering money. These accounts, often opened using fraudulent Know Your Customer (KYC) documents, allow fraudsters to withdraw funds through ATMs, cheques, or digital transactions, making it increasingly difficult for authorities to trace and recover the stolen funds.
Widespread Use of Mule Accounts
Data from the Citizen Financial Cyber Frauds Reporting and Management System has revealed the alarming scale of this issue. Around 40,000 mule accounts have been identified in SBI branches alone, followed by 10,000 in PNB, 7,000 in Canara Bank, 6,000 in Kotak Mahindra Bank, and 5,000 in Airtel Payments Bank. These findings highlight the severity of the problem, with a reported Rs 17,000 crore siphoned off through these illicit activities over the past year. The widespread use of mule accounts poses a significant threat to the integrity of India’s financial ecosystem and is becoming a focal point of attention for the government and law enforcement agencies.
Tightened Monitoring and Proactive Measures
During a crucial three-hour meeting, officials from the PMO were briefed on the steps that have been taken by an inter-ministerial panel to tackle the increasing use of mule accounts in cyber fraud schemes. State and union territory police forces have been directed to take proactive steps to identify and block these accounts. Banks have been urged to launch thorough investigations into the involvement of their staff in facilitating the creation and operation of these fraudulent accounts.
Moreover, the Reserve Bank of India (RBI) and the Ministry of Finance’s Department of Financial Services have been advised to strengthen their regulatory measures and introduce more robust safeguards to curb the growing misuse of mule accounts. These efforts are seen as crucial in preventing further financial losses and ensuring the safety of digital banking transactions in the country.
Airtel Payments Bank’s Approach to Combat Fraud
Airtel Payments Bank, one of the institutions at the forefront of combating fraud, has implemented several measures to minimize the risks posed by mule accounts. The bank primarily caters to small-ticket savings accounts and does not offer current accounts or cheque books, reducing the opportunities for large-scale cyber fraud.
The bank’s spokesperson highlighted the institution’s use of real-time application programming interface (API) integration with the I4C suspect registry to screen customers. This collaboration helps detect suspicious activities early and enables swift action. Additionally, Airtel Payments Bank has adopted advanced artificial intelligence (AI) and machine learning (ML) models to identify potential account takeovers. This technology enhances the bank’s ability to detect irregularities and unauthorized transactions.
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Furthermore, Airtel Payments Bank has introduced Face Match technology as part of its KYC compliance checks. This feature compares a customer’s photo with the one stored in the bank’s records to confirm the authenticity of the individual, significantly reducing the risk of fraud and ensuring that the bank’s accounts are not misused for illegal purposes.
Moving Forward
The freezing of 450,000 mule accounts is a significant milestone in India’s battle against cybercrime. However, the government and financial institutions recognize that much more needs to be done to combat this growing threat. Strengthening KYC procedures, improving surveillance of digital transactions, and enhancing inter-agency cooperation are critical steps in preventing future frauds.
The financial sector is being urged to work together to close the gaps that allow fraudsters to exploit vulnerable accounts. The ongoing investigation and crackdown on mule accounts are essential in protecting the financial security of Indian citizens and maintaining the trust in the country’s banking system. With the adoption of advanced technologies like AI, machine learning, and real-time monitoring, authorities hope to stay one step ahead of cybercriminals and protect citizens from the devastating effects of online fraud.
