MULE ACCOUNT (Syllabus: GS Paper 3 – Economy)

Context: Reserve Bank of India governor has urged banks to step up efforts against ‘mule accounts’. 

Mule Account

• About: These are essentially bank accounts that receive funds from illegal activities and then transfer those funds to other accounts, acting as a bridge for money laundering and other illegal practices.
• In India, mule accounts are being opened by Indian nationals who offer their bank accounts for use in lieu of money.
• Types of Money Mules:

o Victim Mule: It is unaware that their account has been compromised and is used by a fraudster for money laundering. Their account details are typically obtained through data breaches.

o Misled Party: It sends and receives money on behalf of a fraudster, believing the money is legitimate. This often happens when someone responds to a job advertisement that involves handling transactions.

o Deceiver: It opens new accounts using stolen or synthetic identities to facilitate the transfer of stolen money.

o Peddler: A peddler sells their genuine account to a fraudster, who then uses it for sending and receiving stolen money.

o Accomplice: It opens a new account in their own name or uses an existing account to send and receive money as directed by a fraudster.

Detection of Mule Accounts in India

• High Undetected Rate: At a partner bank in India, BioCatch reported that nine out of ten mule accounts were undetected.
• Initial and Subsequent Activity: Initially, 86% of mule account activity came from within India. After a month, this figure decreased to 20%, with 16% of these sessions using a VPN.
• Geographic Trends: Most mule account activity 15% is concentrated in Bhubaneswar. Lucknow and Navi Mumbai each account for 3.4%, while Bhagabatipur and Gobindapur in West Bengal show 1.7% and 2.6%, respectively. Mumbai and Bengaluru report 2.2% and 1.8% of mule account activity, respectively.
• Low VPN Usage: The report indicates that the initial connection for reported mule accounts usually occurs in India with low VPN usage, implying these accounts are predominantly created and operated by Indian nationals.