Why is it in the news?

• The Indian Cyber Crime Coordination Centre (I4C), under the Union Home Ministry, estimates that Indians may lose over ₹1.2 lakh crore to cyber frauds in the coming year, representing around 0.7% of the nation’s GDP.
• According to a senior government official, mule bank accounts are a major factor in these online financial scams.

More about the news

• Fraudulent activities are often linked to Chinese entities, with a significant portion of the stolen funds being siphoned off overseas. The I4C identifies approximately 4,000 mule bank accounts each day.
• Additionally, the Citizen Financial Cyber Fraud Reporting and Management System has identified 18 ATM hotspots across India from which fraudulent withdrawals have occurred.
• Some of these withdrawals have also been traced back to overseas ATMs using debit cards associated with mule accounts in locations such as Dubai, Hong Kong, Bangkok, and Russia.
• The government has discovered “scam compounds” in Southeast Asian nations like Cambodia, Myanmar, and Laos, resembling call centres and serving as hubs for investment scams.
• Many fraudsters, including those from India, use Indian mobile numbers to target unsuspecting individuals. Recently, similar scam compounds have also emerged in Azerbaijan.
• To address these challenges, the Home Ministry plans to convene with the Union Finance Ministry and the Reserve Bank of India to develop a monitoring mechanism for mule accounts.
• Bank officials are advised to flag any unusual high-value transactions in accounts with low balances, particularly those belonging to salaried individuals.
• Further, the official noted that defrauded funds are often stored in these accounts before being transferred abroad, frequently in the form of

Money mule

• A money mule is an individual who transfers or moves illegally acquired funds on behalf of others. Criminals often recruit money mules to launder proceeds from online scams, human trafficking, drug trafficking, and other crimes.
• By using money mules, criminals create layers of distance between themselves and their victims, making it more difficult for law enforcement to trace the money.
• Money mules can facilitate fund transfers through various methods, including bank accounts, cashier’s checks, virtual currencies, prepaid debit cards, or money service businesses.
• To recruit potential mules, criminals frequently use fake job advertisements or create social media posts touting quick money-making opportunities.
• Some money mules are aware they are supporting criminal activities, while others may be oblivious to the true nature of their actions. They often receive a commission for their services or assist under the impression that they have a trustworthy relationship with the person seeking help.
• When such fraudulent activities are reported, money mules often become targets of police investigations. Even if they are not directly involved in the crimes generating the illicit funds, they are considered accomplices for laundering the proceeds of these offenses.