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New DelhiNew Delhi, April 13: To prevent cyber fraud through mules accounts, bank officials are seeking the right to freeze the accounts involved in illegal transactions without wasting permission from bank officials. Banks freeze/block accounts based on internal triggers, however, according to the Money Laundering Act (PMLA), they do not have the right to freeze or block the customer accounts without a proper authority from the Court or Law Enforcement Agencies (LEA). “In view of this, we can propose it as a suggestion for further consideration by the RBI,” a work group constituted by the Indian Banks of Union. The mule accounts are used by fraudsters to transfer illegal funds through banking systems. Although banks freeze thousands of such accounts every year, they quickly create new accounts using flaws in the fraudulent system.

In addition, banks may consider verifying and restricting the most sensitive accounts for abuse as “mule” accounts to channelize illegal funds. Banks have proposed to use the Election Commission database to verify the persons opening accounts using voter ID card and Form 60 – in the absence of permanent account number or PAN – and limiting the number of transactions on such accounts. The fight against mule accounts demands a dynamic, technology-operated approach. It suggested that by integrating Artificial Intelligence (AI) and machine learning (ML) into transaction monitoring systems, banks can overcome existing intervals, estimate criminal strategies and protect the integrity of the financial ecosystem.

A concrete effort associated with investment in technology, training of employees and cooperation between stakeholders will ensure more secure financial scenario. The report introduced a blueprint to curb the money mule activities, saying that dedication and cooperation from financial institutions, regulators, law enforcement agencies and technology providers will be required to implement these measures.