Centre Freezes 4.5 Lakh 'Mule' Bank Accounts in Major Cybercrime Crackdown

In a major move to curb cybercrime, the Centre has frozen approximately 450,000 “mule” bank accounts over the past year, marking a significant escalation in the fight against cyber fraud. Mule accounts, often used for laundering money obtained through online scams, have become a growing concern for Indian banks and law enforcement agencies. 

According to reports, these accounts, spread across various banks, have been found in high concentrations in 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), under the Ministry of Home Affairs, recently held a critical meeting with officials from the Prime Minister’s Office (PMO) to address the alarming rise of mule accounts. During the meeting, officials discussed the vulnerabilities in India’s banking system and how cybercriminals exploit these accounts to launder funds. Fraudsters typically open mule accounts using stolen Know Your Customer (KYC) documents, then withdraw the funds through ATMs, cheques, or digital transactions.

The Scale of the Issue: Banks Under Scrutiny

Data from the Citizen Financial Cyber Frauds Reporting and Management System reveals a staggering number of mule accounts in India. In SBI alone, approximately 40,000 such accounts have been identified, while PNB reports 10,000, Canara Bank has 7,000, Kotak Mahindra Bank 6,000, and Airtel Payments Bank 5,000. The total funds siphoned off through these accounts in the last year are estimated at over Rs 17,000 crore, underscoring the scale and severity of the problem.

Government Takes Action: Strengthened Monitoring and Investigations

Following the recent discussions, officials have outlined a set of proactive measures to combat the rise of mule accounts. State and Union territory police forces have been instructed to take swift action against individuals involved in setting up these accounts. Additionally, banks have been urged to investigate the potential involvement of their own staff members in facilitating these fraudulent activities.

The Reserve Bank of India (RBI) and the Ministry of Finance’s Department of Financial Services have also been advised to enhance safeguards to protect the financial system from cyber fraud.

Airtel Payments Bank’s Efforts to Prevent Fraud

In response to the growing issue, Airtel Payments Bank has taken several steps to mitigate risks associated with mule accounts. As a low-risk bank, catering primarily to small-ticket savings, Airtel Payments Bank does not offer current accounts or cheque books, which are often exploited by fraudsters.

A spokesperson for the bank explained that Airtel Payments Bank employs real-time integration with the I4C suspect registry, using advanced artificial intelligence and machine learning (AI/ML) models to detect account takeovers. Additionally, the bank has introduced Face Match technology, which matches customer photos with KYC records, helping to verify the identity of account holders and reduce the chances of account misuse.

Conclusion: A Fight Against Cybercrime

With the government tightening its grip on cyber fraud and money laundering activities, the measures against mule accounts are a step toward securing India’s financial system. However, the fight is far from over, as fraudsters continue to find new ways to exploit vulnerabilities in the banking system. As banks and law enforcement agencies work together to tackle this issue, tighter monitoring and advanced technologies will play a crucial role in preventing further misuse of financial accounts.