What is mule account fraud, and how to stay safe
What's the story
As digital transactions continue to grow in India, a new form of financial crime has emerged: mule account fraud. This type of scam uses bank accounts (mule accounts) to launder money obtained through illegal means. Venkat Srinivasan, Chief Analytics and Risk Officer at Bureau.id, explained that these accounts have become a major enabler of digital fraud losses in India.
Vulnerability
Mules are the financial plumbing of cybercrime
Srinivasan explained India's vulnerability to mule account fraud by saying, "Mules are the financial plumbing of cybercrime." He added that the scale of digital transactions and an underbanked population make mass mule recruitment easy. These accounts are used in various scams, from phishing to loan scams and cross-border laundering, to move stolen money without detection.
Tactics
How fraudsters run mule accounts
Fraudsters use different tactics to run mule accounts. They target vulnerable groups with offers of quick cash for "renting" their bank account for a few days. Some even use fake or stolen identities to create these accounts, while others link them into hidden webs once active. These networks are used briefly for quick transfers, drained instantly, and then abandoned.
Regulatory response
RBI's efforts to combat mule account fraud
The Reserve Bank of India (RBI) has introduced strict KYC norms, account monitoring systems, and transaction reporting requirements to combat mule account fraud. However, Srinivasan noted that these networks are designed to evade detection. He said they "hide in plain sight, thousands of low-value transactions spread across disposable accounts, each staying just below thresholds."
Legal implications
Unwitting participation in mule activity can have legal consequences
Srinivasan warned that unwitting participation in mule activity can have legal consequences. He said, "People need to understand that handing over their bank account can make them part of a crime, sometimes even landing them in jail." He emphasized the global reach of these frauds by saying one small account in a local town could become a link in a global fraud chain.
Safety tips
How to stay safe from mule account fraud
To stay safe from mule account fraud, never share your bank account or login credentials with unknown individuals or third parties. Be wary of job offers or cash incentives that ask you to use your account for transactions. Regularly monitor account activity and report suspicious transfers immediately. Stay informed through trusted channels, as banks and regulators are increasingly using influencers and visual campaigns to raise awareness about these risks.