Source: ET
Context: Banks are intensifying scrutiny on new sole proprietorship and individual current accounts to combat ‘money mule’ activities, aiming to deter money laundering and digital frauds.
What is a Money Mule?
A money mule is a person who allows their bank account to be used by criminals to transfer illegally obtained money. Banks have observed a rise in mule accounts, particularly among new accounts less than a year old, prompting cautious approvals and transaction limits.
Modus Operandi:
Criminals recruit money mules to launder money from online scams, frauds, and crimes like human trafficking and drug trafficking. They use mules to create distance between victims and themselves, making it harder for law enforcement to trace the funds. Methods include bank transfers, checks, virtual currency, prepaid cards, and more. Mules are often recruited through fake job ads or social media promising easy money. Some know they’re aiding crime; others may not realize. They’re compensated or deceived into believing they’re helping a friend. When caught, they face legal consequences for facilitating money laundering, even if unknowingly.
What measures are being taken by banks?
Measures include verification visits, latitude data checks, and washout logic analysis. The Reserve Bank of India is addressing these concerns with banks amid ongoing discussions on enhancing safeguards against financial fraud.
