The Reserve Bank of India (RBI) said on Friday (Dec 6) that it has created an artificial intelligence (AI)-powered model that can reduce digital fraud by helping banks deal with the growing problem of “mule” bank accounts. The model, called MuleHunter.AI, has been developed by the Reserve Bank Innovation Hub (RBIH), Bengaluru, a subsidiary of the central bank.
What is a Mule Bank Account?
A mule account is a bank account used by criminals for illegal activities, including the laundering of illicit funds. A mule account is usually bought by criminals from their original users, often people from low income groups, or people with low levels of technical literacy.
A related term “money mule” is used to describe innocent victims that criminals use to steal stolen or illicit money through their bank accounts. When such cases are reported, money mules can become the target of police investigations, because it is attached to their accounts, while the real criminals cannot be traced.
The Reserve Bank is taking various measures in coordination with banks and other stakeholders to prevent and minimize digital fraud in the financial sector. These include RBI guidelines to regulated entities to strengthen cyber security, cyber fraud prevention and transaction monitoring. The use of money mule accounts is a common method adopted by fraudsters to channel fraudulent proceeds,” the RBI said in a press release.
The RBI said MuleHunter.AI “enables detection of Mule bank accounts in an efficient manner”. The release said a pilot with two large public sector banks has yielded encouraging results, and asked the banks to collaborate with RBIH to develop the MuleHunter.AI model “to address the issue of mule bank accounts being used for financial fraud”.
How big is the mule account problem in India?
Mule bank accounts are seen as a key element in most online financial frauds in India. The Indian Express reported last month That the Center has frozen around 4.5 lakh such bank accounts, which were commonly used for laundering proceeds of cyber crime.
Of these 4.5 lakh mule accounts, around 40,000 were traced to various branches of SBI; 10,000 to 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.
And what has the government done to stop mule accounts?
On Friday, the Department of Financial Services (DFS) secretary held a meeting with officials of RBI, Indian Cyber Crime Coordination Center (I4C), which is affiliated to the Union Home Ministry, National Bank for Agriculture and Rural Development (NABARD). , and public and private sector banks to discuss the growing challenge of digital financial fraud, especially mule accounts. Recently, many such meetings have been held with various stakeholders.
In Friday’s meeting, banks were urged to adopt best practices, leverage state-of-the-art tools and promote inter-bank collaboration to effectively address mule accounts. They were directed to adopt advanced technologies including AI/ML solutions for real-time detection of mule accounts, and training bank staff on fraud detection and prevention.
They were also encouraged to explore and implement RBI’s new Mulehunter solution to detect and monitor mule accounts.
In November 2023, former DFS secretary Vivek Joshi had said that there should be some restrictions on withdrawing money from bank accounts that can be suddenly activated after being inactive for some time.
“For example, the balance used to be Rs 50, but suddenly Rs 50,000 would arrive in the account. Although there is no problem when money comes in, there should be some restrictions when withdrawing,’ said Joshi He told reporters After a meeting on financial fraud.
The Reserve Bank is also currently conducting a hackathon on the theme “Zero Financial Fraud”, which includes a specific problem statement on mule accounts, to encourage the development of innovative solutions to address the problem.