CBI Uncovers Major Lapses By Banks In 8.5 Lakh Mule Accounts Used For Cyber Frauds Across India

The Central Bureau of Investigation (CBI) which is probing the use of 8.5 lakh mule accounts opened in more than 700 branches of various banks across India by cyber frauds, has come across several lapses and violations on the part of the bank officials. The CBI's probe has revealed that bank accounts of illiterate persons which were used in the cyber fraud were opened in contravention to the banking guidelines The accounts were opened through banking correspondents instead of branch officers and further they were given the access to UPI and other onlıne transactions.

According to the CBI, the said mule accounts were being used by cyber frauds involved in digital arrest scams, impersonation, fraudulent advertisements, investment frauds and UPI-based financial frauds to transfer the cyber fraud amounts from the accounts of the victims. CBI had initially registered an enquiry to unearth the entire conspiracy of opening of mule accounts, the role of the bankers and the middlemen and to understand the existing bank’s rules and guidelines.

"RBI has issued directions to banks to ensure that the banking systems are not to be used as a channel for money laundering and to ensure the integrity and stability of the financial system, The said circular and internal bankıng circulars emphasise on enhanced due diligence and risk categorisation based on parameters such as customer's identity, social financial status, nature of business activity and information about customer's business and geographical basis. Probe has revealed that the mule accounts receive multiple small credits in quick succession in a short span of time followed by immediate withdrawals or transfers," said a CBI official.

"The banks also have to ensure the mechanism of ongoing due diligence of customers to ensure that their transactions are consistent with their knowledge about the customer, customers business and risk profile and the source of funds through alert monitoring system High risk accounts have to be subject to more intense monitoring. However, despite certain areas having high concentration of mule accounts, it has emerged that bank officers were not adopting enhanced due diligence on the suspicious bank accounts," the official said.

"Probe has also revealed that many of the cyber mule accounts were small/tiny accounts. However, in the money mule accounts multiple transactions were happening in a span of a few days and the aggregate amount was crossing the prescribed monthly threshold amount. The bank officers failed to generate Suspicious Transaction Reports (STRs) on the mule accounts which is a violation of RBI circular which states that where it is established that an account opened and operated is that of a Money Mule, but no STR was filed by the concerned bank, it shall then be deemed that the bank has not complied with RBI's directions. Probe has further revealed that certain bank accounts were opened on the basis of forged documents and the account holder in whose name the account was opened was not aware of the opening of account in his name," the official added.