Why in the news?

• The CBI has arrested two bank officials in connection with a mule accounts case.

Mule Accounts

• What is it?:
  • Bank accounts are exploited by criminals for illegal activities like money laundering.
  • Often acquired from individuals in lower-income or less technically literate groups.
  • Account holders, called “money mules,” may unknowingly become targets of police investigations.
• Government and RBI Initiatives:
  • Policy Measures: Collaboration between RBI, Department of Financial Services (DFS), Indian Cybercrime Coordination Centre (I4C), and banks. Emphasis on adopting AI/ML technologies and MuleHunter for fraud prevention.
  • Hackathons: RBI’s “Zero Financial Frauds” hackathon to encourage innovative fraud prevention solutions.
  • Training and Best Practices: Staff training and inter-bank collaboration are emphasized. Restrictions proposed on accounts with sudden high-value transactions after dormancy. 
  • MuleHunter AI:
    • RBI’s AI-powered tool designed to detect and prevent “mule” bank accounts used for financial fraud. Developed by the Reserve Bank Innovation Hub (RBIH) in Bengaluru.
    • Utilizes advanced AI algorithms to identify suspicious patterns and mule accounts efficiently.
    • Encourages collaboration between banks and Reserve Bank Innovation Hub to refine and adopt the tool.

Source: The Hindu