Centre freezes 450,000 'mule' bank accounts used in cyber fraud schemes

The Citizen Financial Cyber Frauds System found 40,000 mule accounts in SBI, 10,000 in PNB, 7,000 in Canara, 6,000 in Kotak Mahindra, and 5,000 in Airtel Payments Bank

In a significant crackdown on cybercrime, the Centre has frozen around 450,000 “mule” bank accounts in the past year, according to a report by The Indian Express. These accounts are typically used to launder money obtained from cyber fraud. While such accounts are spread across various banks, a high concentration has been identified in State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank.

 

Officials from the Indian Cyber Crime Coordination Centre (I4C), under the Ministry of Home Affairs, recently discussed these issues in a meeting with the Prime Minister’s Office (PMO). They outlined the vulnerabilities in the banking system and explained how fraudsters misuse these “mule accounts” — often opened using someone else’s know your customer (KYC) documents — for withdrawing funds through automated teller machines (ATMs), cheques, and digital transactions, the report said.

Widespread use of mule accounts

Data from the Citizen Financial Cyber Frauds Reporting and Management System revealed around 40,000 mule accounts in SBI branches, 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 underscore the scale of the issue, with over Rs 17,000 crore reportedly siphoned off in the last year, the report said.

Tightened monitoring

During the three-hour meeting, PMO officials were briefed on the steps taken by an inter-ministerial panel to address the issue. State and union territory police forces have been instructed to take proactive measures against mule accounts. Additionally, banks have been urged to investigate the role of bank staff in facilitating these accounts. The Reserve Bank of India and the Ministry of Finance’s Department of Financial Services have also been advised to strengthen safeguards, the report mentioned.

Airtel Payments Bank's measures to counter fraud

The report quoted a spokesperson for Airtel Payments Bank, highlighting the bank’s approach to minimising 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, a key factor in preventing cyber fraud.

 

The bank uses real-time application programming interface (API) integration with the I4C suspect registry to screen customers, along with advanced artificial intelligence/machine learning (AI/ML) models to detect account takeovers. Airtel Payments Bank has also introduced Face Match technology, which helps verify KYC compliance by matching customer photos with records, further reducing the risk of misuse.