Mule account is not new. It has been in use since long. A bank account holder has been helping neighbor with his account to receive/send money. In recent times, it caught the fancy of cyber frauds who started using other’s bank account for receiving, parking and transferring ill gotten money. Such accounts have been nicknamed Mule Accounts. More than 90 percent of the cyber frauds were executed with the help of mule accounts only. Reserve Bank of India (RBI) Innovation Hub has recently developed a software MuleHunter AI for identification, notification and appropriate action on mule accounts. Let us discuss the details.
Nature of Mule account: Mule accounts are genuine bank accounts with genuine KYC details. The owner is equipped with cheque book, debit card, internet banking, mobile banking etc. He has all the facilities a bank account holder can avail. The account owner gives the account on rent and hands over all his banking facilities including log in id and password to the bank account tenant. As per prevalent practice, the account owner is paid 1.0 per cent of the transaction amount. Suppose the mule account has been used for a transaction of Rs 10 lakh, the account owner gets Rs 10000 as rent. In some cases, there is fixed rent for the account. You google for ‘bank account on rent’ and will find numerous bank account landlords and tenants. After all, what’s the use of mule account?
A boon for cyber frauds: Mule accounts are used to receive and transmit money generated through hacking, gaming, drug trafficking, sale of illegal weapons etc. Sometimes, the mule is asked for cash and sometimes just transfer of money to some other account. The terrorists had used the channel of mule account for financing Parliament Attack of 2001. Many people are involved in the business of roping in unsuspected daily wagers for acquiring mule account and renting the same at higher fees. Mules are mules. Sometimes they act smart. Either they vanish with the entire money or report the transaction to police and share the booty.
Many faces of mules: As per cyber fraud textbook, mules are of five kinds: Victim mule, Misled mule, Deceiver mule, Peddler Mule and the Accomplice Mule. A victim mule is a victim of data theft and is unaware of transactions in his account. The fraudsters open account in his name without his knowledge and consent and operate the same as per their wish. Misled mule is a mule who sends and receives money through his account believing that the money is clean. Some companies employ people as money transfer agent and utilize their account for mule purposes as per employment terms and conditions. These are Misled type of mules. Deceiver mule is an account where stolen or synthetic identities are used to send and receive ill gotten money. Peddler mule sells his account to the fraudster for one time lumpsum payment or monthly rent/commission. Accomplice mule either opens new account or uses existing account to send and receive dirty money. These are only broad classifications. Dead persons’ accounts are rented by their family members to earn ‘extra’. Mule account dealers may be seen at crematoriums in search of prospective clients.
Difficult to detect and deal: As per Digital fraud detection company BioCatch, nine out of ten mule accounts go undetected. Banks are not able to identify such accounts because these are opened through legitimate KYC. The number of cyber fraud cases have increased 10 times during last five years, as per data provided by the government in the Parliament. Cyber fraud industry has grown from Rs 129 Crore in FY20 to Rs 1455 Crore in FY24. Ninety percent of the cyber-crimes were routed through mule accounts.
RBI Innovation Hub accepts the challenge: Keeping in view the growing menace of mules in general and Accomplice mules in particular, RBI Innovation Hub has come up with MuleHunter AI. It is a software equipped with artificial intelligence to detect suspicious activity in bank account, identify mule account, raise alarm and generate report. The combination of SETU, the account aggregating software and MuleHunter AI may prove lethal for Mules But the core problem lies with fresh account target given to young bank executives. They are prone to tweaking rules of account opening. They should be sensitized first. The bank executives are the best MuleHunters. They know the account holders and the account activities. They can go a long way in catching the mules.
