“Cooling-off facility” in online transactions soon to mitigate mule menace

It will be a step by RBI to stay a neutralise fraudsters.

STC NEWS MONITORING DESK

JANUARY 20 ( STC): The government and Reserve Bank of India (RBI) are considering a ‘cooling off facility’ to temporarily block funds in bank accounts to combat online fraud through mule accounts. Enhanced KYC protocols and inactive account closures are also being explored as measures to prevent digital payment fraud, says an ET Online report.
This initiative aims to curb the routing of funds through multiple mule accounts, which are notoriously difficult to trace and recover.
Mule accounts are third-party bank accounts exploited to funnel illicit funds for criminals. Quoting banking experts, the report says that prompt reporting of digital payment fraud within the critical “golden hour” can significantly enhance the chances of freezing stolen assets before they are transferred to the fraudsters’ accounts.
The proposed “cooling off period” is expected to serve to halt immediate fund transfers, thus giving authorities more time to act.
The issue of mule accounts, which facilitate online scams are reportedly occurring at an alarming rate of nearly once every two minutes. Although most online fraud schemes, such as “digital arrests” and phishing attacks, may not directly involve banks, the illicit proceeds are often withdrawn using mule accounts.
Notably, the Ministry of Home Affairs (MHA) 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. (STC)