Cyber crimes: 4.5 lakh 'mule' accounts frozen, many in public sector banks

• Officials of the Indian Cyber Crime Coordination Centre (I4C), which reports to the Ministry of Home Affairs, recently conveyed this to the Prime Minister’s Office in a meeting, where shortcomings of the banking system were discussed.

Highlights:

• In an intensified crackdown on cybercrime, the Indian government has frozen approximately 4.5 lakh mule bank accounts over the past year. These accounts, commonly used for laundering proceeds from cyber fraud, were identified across major banks, with the highest concentration in State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, Kotak Mahindra Bank, and Airtel Payments Bank.
• The Indian Cyber Crime Coordination Centre (I4C), under the Ministry of Home Affairs, reported these findings to the Prime Minister's Office (PMO), citing significant gaps in the banking system that enable such fraudulent activities.

Key Findings

Extent of Cybercrime and Fraud

• Mule Accounts Detected:
  • SBI: 40,000 accounts
  • PNB: 10,000 accounts
  • Canara Bank: 7,000 accounts
  • Kotak Mahindra Bank: 6,000 accounts
  • Airtel Payments Bank: 5,000 accounts

Method of Withdrawal:

• Cheques
• Digital transactions
• ATMs

Cybercrime Impact:

• Over 1 lakh complaints registered since January 2023.
• Estimated financial loss: ₹17,000 crore in the last year.

Banking Sector Shortcomings:

• Fraudsters are leveraging KYC documents of unsuspecting individuals to create mule accounts.
• Gaps in monitoring and verification have been identified, with potential involvement of bank officials.

Response from Airtel Payments Bank:

• Highlighted that it caters to low-risk, small-ticket savings accounts and does not offer cheque book facilities, minimizing its exposure.
• Developed AI/ML-based detection models and Face Match technology to reduce the risk of mule accounts.
• Integrated with I4C's real-time suspect registry to prevent fraudulent accounts.

Government and RBI Interventions

Proactive Measures by I4C:

• Directed police forces in states and union territories to investigate mule accounts and take action against cyber fraudsters.
• High-level inter-ministerial panel identified systemic loopholes for rectification.

Role of Financial Institutions:

• RBI and the Ministry of Finance's Department of Financial Services instructed to tighten regulations, improve monitoring, and ensure compliance.

Bank Manager Accountability:

• PMO emphasized the need to probe the role of bank officials in facilitating the creation of mule accounts.

Key Technologies to Combat Fraud

• API Integration: Airtel Payments Bank’s use of the I4C suspect registry for real-time customer screening.
• AI/ML Models: Proprietary models developed for detecting anomalies and preventing account misuse.
• Face Match Technology: Matches app-captured customer images with KYC records for enhanced security.

Prelims Takeaways

• Indian Cyber Crime Coordination Centre (I4C)
• Airtel Payments Bank