Mule accounts mushroom in new pockets as investigators target hotspots
Mule accounts — once synonymous with the Jharkhand town of Jamtara and Nuh in Haryana — are now surfacing in quieter corners of India, like Katni and Shajapur in Madhya Pradesh, Kalaburagi in Karnataka and pockets of Assam.
Criminals often use mule accounts to launder illicit funds. As investigators crackdown on these networks in the known hotspots, the operators are moving to newer places, according to the insights shared at a meeting of bankers, government officials and investigative agencies held last month, people familiar with the matter said.
The scale is staggering. Banks have frozen some 850,000 such accounts at 700 branches across the country, which shows how widely this shadowy network has spread.
Bank officials say the fraud economy is evolving fast, with criminals routing money through unlikely channels, including in-game purchases that slip across borders.
Banks, investigative agencies and regulators are now taking coordinated action to identify and freeze such accounts used for laundering money and book the people behind them, amid an increase in cybercrime, including digital arrests, to extort money.
Speaking at the VKRV Rao Memorial lecture at Delhi School of Economics on Thursday, Reserve Bank of India governor Sanjay Malhotra said the regulator is taking a number of measures including better coordination with the Indian Cybercrime Coordination Centre (I4C) under the home ministry. "This is something which we are constantly reviewing at my level, DG level as to how to improve our whole safety and security of the banks and the payment system," he said.
A bank official said they are sharing analysis of such accounts and transactions with investigative agencies. Integration of real-time data from the National Payment Corporation of India and the National Crime Reporting Portal (NCRP ) is being actively pursued to identify financial profiles and transaction history, the official said.
Strengthen KYC checks
“Fraudsters target branches in rural areas,” said Rajit Bhattacharya, cofounder of Mumbai-based fraud detection startup Datasutram. “Sometimes they go after digital banking platforms with comparatively lesser KYC checks, they exploit such loopholes till it gets plugged and move on to other areas or newer banks,” he said.
Anomalies in KYC data are leading indicators of emerging financial crime hotspots, said Ashok Hariharan, chief executive of Mumbai-based identity verification startup Idfy.
Criminals often use mule accounts to launder illicit funds. As investigators crackdown on these networks in the known hotspots, the operators are moving to newer places, according to the insights shared at a meeting of bankers, government officials and investigative agencies held last month, people familiar with the matter said.
The scale is staggering. Banks have frozen some 850,000 such accounts at 700 branches across the country, which shows how widely this shadowy network has spread.
Bank officials say the fraud economy is evolving fast, with criminals routing money through unlikely channels, including in-game purchases that slip across borders.
Banks, investigative agencies and regulators are now taking coordinated action to identify and freeze such accounts used for laundering money and book the people behind them, amid an increase in cybercrime, including digital arrests, to extort money.
Speaking at the VKRV Rao Memorial lecture at Delhi School of Economics on Thursday, Reserve Bank of India governor Sanjay Malhotra said the regulator is taking a number of measures including better coordination with the Indian Cybercrime Coordination Centre (I4C) under the home ministry. "This is something which we are constantly reviewing at my level, DG level as to how to improve our whole safety and security of the banks and the payment system," he said.
A bank official said they are sharing analysis of such accounts and transactions with investigative agencies. Integration of real-time data from the National Payment Corporation of India and the National Crime Reporting Portal (NCRP ) is being actively pursued to identify financial profiles and transaction history, the official said.
Strengthen KYC checks
“Fraudsters target branches in rural areas,” said Rajit Bhattacharya, cofounder of Mumbai-based fraud detection startup Datasutram. “Sometimes they go after digital banking platforms with comparatively lesser KYC checks, they exploit such loopholes till it gets plugged and move on to other areas or newer banks,” he said.
Anomalies in KYC data are leading indicators of emerging financial crime hotspots, said Ashok Hariharan, chief executive of Mumbai-based identity verification startup Idfy.
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