Highlighting the steps taken by the Reserve Bank of India (RBI), Governor Shaktikanta Das on Friday said the central bank is set to roll out AI/ML-based tool to curb the Mule Accounts fraud menace.

Governor said the AI/ML based model called MuleHunter.AITM, being piloted by Reserve Bank Innovation Hub (RBIH), a subsidiary of Reserve Bank enables detection of mule bank accounts in an efficient manner.

A pilot program with two major public sector banks has shown promising results, he mentioned.

He further encouraged banks to collaborate with RBIH to further develop the MuleHunter.AITM initiative to deal with the issue of mule bank accounts being used for committing financial frauds.

The Governor highlighted that the RBI has been taking various measures in coordination with banks and other stakeholders to prevent and mitigate digital frauds in the financial sector.

These include RBI guidelines to regulated entities for strengthening cybersecurity, cyber fraud prevention and transaction monitoring.

Many key banks have welcomed the RBI’s step as Ajay Kumar Srivastava, Managing Director and CEO, Indian Overseas Bank said, “The introduction of Mulehunter.AI, will enable the banking sector to address the issue of mule accounts efficiently, ensuring greater security and trust in the digital ecosystem.”

Recently, in an exclusive interaction with ETBFSI, the CEO of RBI Innovation Hub, Rajesh Bansal, had shared that the RBIH has embarked on a pioneering initiative to curb financial frauds, particularly those involving mule accounts, through the development and implementation of cutting-edge technological solutions.

Highlighting the significance of leveraging AI technology in fraud prevention, Bansal emphasised the importance of timely detection and intervention to safeguard the integrity of the financial system.

“One of the important things is obviously trying reducing frauds using AI, improving detection in time, which will really go a long way. This year we have to work on that, 2-3 banks have tied up with us, and they are more than excited if they can help us solve this. Again, we are a public policy institution so they realise the benefits we can bring to the table,” Bansal had said.

What is a mule account fraud?

Mule accounts are owned by people who are duped by fraudsters into laundering stolen/illegal money via their bank accounts.

Either willingly or unknowingly, the details are provided by the individuals to scammers to launder money that has been obtained illegally or stolen.

To put it simply, Mule accounts are bank accounts that people either intentionally or without realizing it, allow criminals to use to hide and move stolen or bad money. When money is moved through many different accounts, often in different countries, it becomes harder for the police to find the criminals.

What is the status of Mule Accounts in India?

According to a recent report, the Union Government has frozen around 4.5 lakh mule bank accounts in the past year.

Officials from the Indian Cyber Crime Coordination Centre (I4C), under the Ministry of Home Affairs, recently discussed these issues in a meeting with the Prime Minister’s Office (PMO).

As per the reports, they outlined the vulnerabilities in the banking system and explained how fraudsters misuse these “mule accounts” — often opened using someone else’s know your customer (KYC) documents — for withdrawing funds through automated teller machines (ATMs), cheques, and digital transactions.