Most Indian banks have systems in place to monitor the behaviour of mule accounts, said Reserve Bank of India Governor Shaktikanta Das during a press conference on Thursday.

A mule account is a bank account that is used for illegal activities like money laundering, tax evasion, fraudulent transactions, etc. These types of accounts usually are created in someone else’s name or under a false identity and serve as an intermediary between the criminal organisation and the illicit funds. This makes it difficult for authorities to trace the origin of such activities.

These activities violate the Prevention of Money Laundering Act (PMLA) and tax laws and contravene guidelines set by the Securities and Exchange Board of India (SEBI) and the RBI.

“Banks have (a) transaction monitoring system. There are odd, idiosyncratic transactions, for example, a low value, a bank account where the transactions have been of very low value, suddenly, if the transaction frequency or the amounts being transacted it goes up. This means that, in many such instances, the transactions are held late at night. So the banks have systems now to monitor that, and that is something we have sensitised the banks (on),” he said.
Governor Das, in July, held meetings with the senior officials of public sector banks and select private sector banks asking them to step up their efforts against such accounts.

The meeting also covered broader banking sector concerns, including the gap between credit and deposit growth, liquidity risk management, and trends in unsecured retail lending.

He urged banks to ensure they have robust cybersecurity measures and effective transaction monitoring systems to detect and prevent such accounts. He also called for increased customer awareness and education to help curb digital fraud.

According to a report by Business Standard, Jamtara, Mahabaleshwar and some areas in South India have been identified as hot spots for such activities.

The central bank has been collaborating closely with the Indian Cyber Crime Control Centre (I4C) under the Ministry of Home Affairs (MHA) and various other agencies to curb mule accounts and digital frauds.

Also Read: Over ₹10,300 crore siphoned off by cyber criminals since April 2021: I4C