According to a report, 78% of India's  15-plus  population has a bank account in  2021. Many of us are more likely to have more than one bank account. Similarly, some of these accounts may not be in use. Many such inactive bank accounts have emerged as a major cause of money laundering. These accounts are known as Mule Accounts in the financial world. These are being used by money laundering gangs to defraud the owners of these accounts or with their permission.

While such scams are rampant in northern cities like Jamtara and Mahabaleshwar, there are reports that it has spread to some cities in South India. A report tabled in parliament shows that in the last four years, the number of such frauds has increased 10 times. Meanwhile, the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) and financial institutions have been busy tracing unused bank accounts. Last month, bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) governor Shaktikanta Das had asked banks to take steps to prevent frauds and online financial frauds through unused bank accounts. As a sequel... He continues to operate with the indian Cyber Crime Control Centre, which comes under the Ministry of home Affairs.

"Such bank accounts pose some significant risks such as illicit money transfer and reduce the integrity of financial institutions. It becomes even more difficult to trace such accounts as the owners of such accounts with their full knowledge and permission, rent for illegal activities. So banks need security systems to better track cash transfers," says ashok Hariharan, co-founder & CEO of IDfy, an identity verification platform. Hariharan says banks should flag suspicious accounts during the on-boarding phase and "strongly recommend that you improve your customer requirements for these accounts."

While progress has been made in recovering lost funds, the reality is that the scale is less than the level of fraud. The amount recovered jumped 11 times from Rs 12 crore in   to Rs 139 crore in 2024. However, the recovery rate remains relatively low. Only 9.5 per cent of the total fraudulent amounts were withdrawn in 2023-24,  a slight increase from 9.3  per cent from 2019-20 from five years ago.


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S Venkateshwari

28/08/2024 10:21 AM