The Centre has frozen around 4.5 lakh “mule” bank accounts, typically used for laundering proceeds of cyber crimes, in the past year, The Indian Express has learnt. While such accounts operate across the banking system, the most were found with the State Bank of India, Punjab National Bank, Canara Bank, Kotak Mahindra Bank and Airtel Payments Bank, sources said. Officials of the Indian Cyber Crime Coordination Centre (I4C), which reports to the Ministry of Home Affairs, recently conveyed this to the Prime Minister’s Office in a meeting, where shortcomings of the banking system were discussed. They also highlighted that fraudsters are nowadays withdrawing payments from such “mule accounts” — which are usually created using KYC documents of another person — through cheques, ATMs, and digitally. This was the latest in a series of meetings held between officials of the I4C and the PMO on the issue. According to sources, the I4C cited records from the Citizen Financial Cyber Frauds Reporting and Management System, where such complaints are logged. As per the data, around 40,000 mule bank accounts were detected in branches of SBI; 10,000 in Punjab National Bank (including Oriental Bank of Commerce and United Bank of India); 7,000 in Canara Bank (including Syndicate Bank); 6,000 in Kotak Mahindra Bank; and 5,000 in Airtel Payments Bank. “The probe revealed that fraudsters are nowadays using three methods for withdrawing money — cheques, digital and from the ATM. Around 1 lakh cyber complaints have been registered with the National Cybercrime Reporting Portal since January 2023, and around Rs 17,000 crore in cash has been defrauded in the last one year,” said a source. In the meeting, which lasted around three hours, PMO officials were informed that the Centre’s high-level inter-ministerial panel has identified the loopholes, and directed the police forces in states and union territories for proactive action against such mule bank accounts. “They have also been asked to investigate the role of bank managers/officials in opening such accounts… Officials of the Reserve Bank of India and Union Ministry of Finance’s Department of Financial Services were also asked to take necessary measures,” the source said. When contacted, a spokesperson for Airtel Payments Bank said they are “a low risk bank catering to small ticket savings and driving the digital financial inclusion agenda of the country”. “The Bank doesn’t offer a current account or the cheque book facility to customers, one of the key reasons behind cyber frauds. Consequently, a very small fraction of mule account money passes through the Bank,” the spokesperson said. “It is first amongst a handful of banks in the country that has real time API integration with the I4C suspect registry. The bank uses this registry to screen its customers and prevents such actors from having an account based relationship with Airtel payments bank. Parallelly, the Bank has developed proprietary AI/ML models over years to detect and prevent account takeovers by mules, which are now industry leading in terms of model performance efficiencies. Equally, on the customer side, the Bank has devised digital innovations, one of them being Face Match, which uses pictures taken through the bank app on a customer’s mobile phone, matching them with customer KYC records, further reducing mule account risk.” The other banks did not respond to queries from The Indian Express.
