Financial frauds in the country are on the rise, and one of the main reasons behind this increase is the proliferation of mule accounts, according to a senior cybercrime official. These mule accounts, which are used by cybercriminals to facilitate the transfer of money in fraudulent activities, have become a major challenge for law enforcement agencies. Money mules, who are often innocent victims deceived by fraudsters, play a crucial role in laundering stolen or illegal money through their bank accounts.
The official highlighted that the existence of mule accounts makes it easier for fraudsters to carry out financial crimes, with almost 99 percent of fraud cases involving the use of these accounts. The ease with which mule accounts are opened and used by cybercriminals across the country is alarming. While some regions like Jamtara and Mahabaleshwar have been identified as hot spots for such activities, the official did not disclose the names of other places where mule accounts are prevalent.
The data provided by the government in the Parliament revealed a ten-fold increase in cyber fraud cases, from 2,677 in FY20 to 29,082 in FY24. This surge in fraudulent activities underscores the growing sophistication of fraudsters and the vulnerabilities within the financial system. To combat this issue, government agencies and the Reserve Bank of India (RBI) have ramped up their efforts to scrutinize mule accounts and curb digital frauds.
RBI Governor Shaktikanta Das recently urged banks to intensify their efforts against mule accounts and enhance measures to prevent digital frauds. The collaboration between RBI, the Indian Cyber Crime Control Centre (I4C), and other agencies aims to strengthen the fight against mule accounts and illicit financial activities. Ashok Hariharan, CEO of IDfy, emphasized the need for robust defense systems to detect fraudulent activities involving mule accounts. He recommended that banks implement enhanced know-your-customer requirements and flag suspicious accounts during the onboarding process.
While there have been some improvements in recovering funds lost to financial frauds, the efforts have not been sufficient to match the scale of the problem. The amount recovered increased significantly from Rs 12 crore in FY20 to Rs 139 crore in FY24. However, the recovery rate remains relatively low, with only 9.5 percent of the total fraudulent amounts being reclaimed in 2023-24. This highlights the challenges in recovering funds lost to financial frauds and the need for stronger measures to combat this growing threat.
