Be cautious! Don’t Sell or Rent Out Your Bank Account

If you are moving money at the behest of some other person, you may be serving as a money mule. it is punishable under law.

Sajjad Bazaz
In this modern digital era, online frauds have become permanent companions in daily public life. Even as the government and the Reserve Bank of India (RBI) are continuously taking measures to control the menace, digital financial frauds have been occurring at an alarming rate of nearly once every two minutes. Even as most of the online financial fraud schemes, such as phishing attacks etc., may not directly involve banks, the illicit funds are often siphoned out by the fraudsters using multiple bank accounts of third persons, known as mule accounts.

Mule bank accounts have proved a headache for the banking regulator and other law enforcing authorities as most of these accounts remain untraced. The growing mule account menace has emerged as a big challenge to the anti-money laundering operations.

Last year, the government’s law enforcing agencies froze around 4.5 lakh “mule” bank accounts, which were typically used by cybercriminals for laundering proceeds of cyber crimes. The Indian Cyber Crime Coordination Centre data while reporting shortcomings of the banking system reveals that 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 reports 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.

According to the reports, around 1 lakh cyber complaints were 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.

In one of its efforts to curb online frauds, the government and the Reserve Bank of India (RBI) are now in the process of exploring the option of implementing a “cooling off facility”. This initiative aims to curb the routing of funds through multiple mule accounts, which are notoriously difficult to trace and recover. This means funds deposited into the bank accounts would be temporarily blocked. However, the authorities are assessing potential effectiveness of “cooling off facility” while ensuring that customers do not face undue inconvenience.

Pertinently, the Reserve Bank of India through its Reserve Bank Innovation Hub (RBIH) has developed an innovative AI/ML-based model called MuleHunter to weed out mule accounts. MuleHunter enables detection of mule bank accounts in an efficient manner. As per the RBI, a pilot with two large public sector banks showed encouraging results.

Here it is imperative for the customers to be prompt in reporting digital payment fraud within the critical “golden hour” as it can significantly enhance the chances of freezing stolen funds before they are transferred to the fraudsters’ accounts. The proposed “cooling off period” would serve to halt immediate fund transfers, thus giving authorities more time to act.

What are mule bank accounts?
Mule bank accounts can be categorised into two groups: some account holders knowingly participate in the fraudulent activities against some profit, while others are unsuspecting victims who are unaware that their accounts are being exploited for criminal purposes. However, it has been observed that most of the money mules are unaware about the crime till the fraudsters get trapped.
These account holders are called money mules. So, a money mule is someone who transfers or moves illegally acquired money on behalf of someone else. Actually, the cyber criminals use the bank account of account holders to transfer ill-gotten money to remain unidentified. In other words, these gullible account holders are money mules which help the criminals to remain untraced for the crime victims and criminals, as it becomes harder for police or any investigating agency to accurately trace the money trails.

So beware, if you are moving money at the behest of some other person, you may be serving as a money mule.

What are the tactics adopted by fraudsters to recruit money mules?
As far as the modus operandi adopted by the fraudsters to recruit money mules is concerned, the RBI directions in this regard are worth quoting. It is explained as:

• Fraudsters contact customers via emails, social media, etc.,and persuade them to receive money into their bank accounts (money mule), in exchange for attractive commissions.
• The money mule is then directed to transfer the money to another money mule’s account, starting a chain that ultimately results in the money getting transferred to the fraudster’s account.
• Alternatively, the fraudster may direct the money mule to withdraw cash and hand it over to someone.
• When such frauds are reported, the money mule becomes the target of police investigation for money laundering.

What are the precautions to be observed by a bank account holder?
The basic thing is not to share the details of your bank account, especially to a stranger. There is every possibility that you may be lured to share the account details, but don’t succumb to the greed.
Following precautions, listed by the RBI, need to be noted if you don’t want to get trapped as a money mule:

• Do not allow others to use your account to receive or transfer money for a fee/payment.
• Do not respond to emails asking for your bank account details.
• Do not get carried away by attractive offers / commissions and give consent to receive unauthorised money and to transfer them to others or withdraw cash and give it out for a handsome fee.

What are the consequences if one is found involved as a money mule?
The Ministry of Home Affairs (MHA), through its Indian Cyber Crime Coordination Centre, has issued warnings to the public against selling or renting out their bank accounts. Additionally, it has urged banks to enhance their Know Your Customer (KYC) protocols to prevent the creation of accounts without adequate identity verification. In response, banks have begun establishing central units to address mule accounts and are implementing technology to identify them. Furthermore, banks are closing accounts that have remained inactive for two years to mitigate the risk of misuse. Further, the banks are under instructions from the Ministry of Home Affairs to investigate the role of bank managers/officials in opening such accounts.

So, it is illegal to be a money mule and warrants punishment. Even if you aren’t aware of being used as a money mule, you would be held responsible for a crime. The RBI states, if the source of funds is not genuine, or the rationale for underlying transaction is not proved to authorities, the receiver of money is likely to land in serious trouble with police and other law enforcement agencies. Besides, a money mule can also damage his credit and financial standing and law can hold him/her personally liable for repaying money lost by victims.
(The author is Editor-in-Chief, Straight Talk Communications. He is former Head Corporate Communications & CSR and Internal Communication & Knowledge Management Departments of J&K Bank)