India Freezes 4.5 Lakh Mule Accounts to Curb Cybercrime Money Laundering

The Centre has recently frozen approximately 4.5 lakh "mule" bank accounts used for laundering funds from cybercrimes over the past year, according to reports gathered by The Indian Express. These accounts are present across the banking network, with a significant number identified within banks like State Bank of India , Punjab National Bank, Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank , as per sources.

Officials from the Indian Cyber Crime Coordination Centre (I4C), under the Ministry of Home Affairs, briefed the Prime Minister’s Office (PMO) on this issue during a recent meeting. They discussed vulnerabilities within the banking system and highlighted that cybercriminals now often utilize mule accounts to withdraw money via cheques, ATMs, and digital methods. These accounts are typically set up using another individual’s KYC documents to conceal the identity of the fraudsters.

This update follows a series of strategic meetings between I4C and the PMO, focusing on enhancing the system’s ability to address cyber fraud. Data from the Citizen Financial Cyber Frauds Reporting and Management System provided insights into these fraudulent accounts, revealing around 40,000 accounts at SBI branches, 10,000 at PNB (including Oriental Bank of Commerce and United Bank of India), 7,000 at Canara Bank (including Syndicate Bank), 6,000 at Kotak Mahindra, and 5,000 at Airtel Payments Bank.

According to sources, criminals are leveraging multiple methods—cheques, digital transactions, and ATMs—to withdraw funds. Since January 2023, approximately one lakh cyber complaints have been registered with the National Cybercrime Reporting Portal, with over Rs 17,000 crore fraudulently siphoned over the last year.

During the recent three-hour PMO meeting, officials shared that an inter-ministerial panel has identified critical loopholes in the system. Police forces across states and union territories have been instructed to intensify action against these mule accounts and assess the role of bank officials in enabling them. Additionally, representatives from the Reserve Bank of India and the Finance Ministry’s Department of Financial Services were urged to implement necessary security measures.

A spokesperson for Airtel Payments Bank, when contacted, clarified that the bank has limited risk as it primarily caters to small-ticket savings accounts without current account or cheque book options, commonly exploited in fraud. The bank noted it has implemented advanced AI/ML systems and real-time integration with the I4C registry to screen customers and curb mule account activities. A proprietary feature, Face Match, matches customer photos with KYC records to further reduce risks.