Cyber frauds have become quite rampant these days and users who are not so tech-savvy often fall victim to such frauds, either losing money or sharing information that is used for illegal transactions.
Around 450,000 mule accounts have been frozen in public and public sector banks, including quite a large number in SBI, PNB, Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank
Cyber frauds have become quite rampant these days and users who are not so tech-savvy often fall victim to such frauds, either losing money or sharing information that is used for illegal transactions.
The Indian Cyber Crime Coordination Centre (I4C), which was established by the Ministry of Home Affairs (MHA), Government of India to provide a framework for law enforcement agencies to handle cybercrimes, said it had recently identified as many as 450,000 mule accounts in several banks, including quite a large number in public and private sector banks.
Reportedly, the Centre has frozen 40,000 such accounts with State Bank of India (SBI) and 10,000 accounts in the Punjab National Bank (PNB). Other banks where such accounts have been frozen belong to Oriental Bank of Commerce and United Bank of India, which were merged with PNB in 2020. Furthermore, 7,000 mule accounts were frozen in Canara Bank, and 6,000 accounts in Kotak Mahindra Bank, and 5,000 accounts in Airtel Payments Bank.
Mule accounts are bank accounts, which are used for illegal transactions, including transacting and transferring money for illicit activities. These are typically used for laundering money, and accountholders may or may not know that their accounts are being used to facilitate transactions prohibited under the Prevention of Money Laundering Act (PMLA).
The Reserve Bank of India (RBI) explains mule accounts as one that can be used to launder the proceeds of fraud schemes, such as phishing and identity theft, by fraudsters by illegally gaining access to deposit accounts through third parties. These third parties or the ‘money mules’ may be innocent in some cases, while in others, they may have complicity with the criminals.
According to the I4C, the mule accounts are usually opened with the know-your-customer (KYC) documents of a third party and then used without the knowledge of the accountholders. At times, these are opened in the name of another person, and a fee is paid to them for using their accounts. Sometimes, cyber fraudsters trick innocent accountholders into investing in stocks to earn attractive profits, and get their bank account details to carry on the activities.
Since January 2023, around 100,000 cyber complaints have been lodged with the National Cybercrime Reporting Portal. In the last one year, approximately Rs 17,000 crore has been siphoned off primarily through cash withdrawals from ATM, cheques, and online transfers.
At a meeting with the Prime Minister’s Office (PMO), loopholes were discussed, and police forces and officials in the RBI and Department of Financial Services were directed to act proactively in this regard, starting from account opening, documentation, and the involvement of bank officials in some cases, according to a report in The Indian Express.
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The RBI, under its RBI Kahta Hai programme, has been raising awareness through several digital platforms about ‘Money Mules’ and how to avoid being one. In a meeting with the top management of banks in July this year, RBI Governor Shaktikanta Das also discussed the ‘Money Mule’ issue
emphasising the need to strengthen cybersecurity systems in the banks, and manage third-party risks. He asked banks to take initiative and raise awareness among accountholders about the issue.