How Indian agencies are combatting the menace of Mule Account

A mule account is a bank account (which can be a savings, current, or corporate account) opened by individuals or entities recruited to act as “money mules.” These individuals are typically paid a fee—either a one-time payment or a recurring monthly amount—to allow their bank accounts to be used by scamsters. The primary purpose of these accounts is to facilitate the collection, transfer, and layering of illicit funds generated from various illegal activities, such as online betting, gambling, digital arrest scams, impersonation, fraudulent advertisements, investment frauds, and UPI-based financial frauds. Crucially, the actual perpetrators maintain full control over these accounts, while the mule account holders usually have no access or oversight.

Indian agencies are undertaking significant efforts to combat the menace of mule accounts:

Reserve Bank of India (RBI)

The RBI is focusing on technological solutions and awareness to curb the misuse of mule account. Its subsidiary, the Reserve Bank Innovation Hub (RBIH), developed an AI/ML-based model called MuleHunter.AI™. This tool is designed for efficient detection of mule bank accounts and has shown promising results in a pilot program with two major public sector banks. Furthermore, the RBI is promoting innovative solutions through initiatives like the “Zero Financial Frauds” hackathon, which includes a specific challenge aimed at developing novel methods to combat the misuse of mule accounts in financial crimes.

These coordinated efforts by law enforcement, financial intelligence, and regulatory bodies highlight India’s multi-pronged strategy to address the growing threat posed by mule accounts in the landscape of financial crime and cyber fraud.

Central Bureau of Investigation (CBI)

The CBI’s “Operation Chakra-V” focuses on dismantling organized cyber fraud networks that utilize mule accounts for various scams, including digital arrest scams and financial frauds. On June 26, 2025, the CBI launched coordinated searches at 42 locations across Rajasthan, Delhi, Haryana, Uttarakhand, and Uttar Pradesh. Their investigation revealed that over 8.5 lakh mule accounts were opened across more than 700 bank branches nationwide, often without proper KYC norms or sufficient customer due diligence. The CBI found instances where bank officials, agents, aggregators, bank correspondents, and middlemen facilitated these illicit account openings and transactions, violating RBI guidelines. As part of this operation, nine individuals, including middlemen and bank facilitators, were arrested. An FIR has been registered for offences including criminal conspiracy, cheating, forgery, and criminal misconduct by bank officials.

Directorate of Enforcement (ED)

The ED targets mule accounts involved in money laundering under the Prevention of Money Laundering Act (PMLA), 2002. For instance, on June 5, 2025, the ED’s Kolkata Zonal Office conducted searches across West Bengal, Delhi, Bihar, Uttar Pradesh, and Assam, linked to a racket operating mule accounts for illegal betting and gambling. These operations led to the seizure of incriminating documents and digital devices, and the freezing of 766 mule bank accounts and 17 Debit/Credit Cards. Two individuals, Vishal Bhardwaj alias Badal Bhardwaj and Sonu Kr. Thakur, were arrested for their involvement in recruiting money mules and facilitating the layering of proceeds from online betting and gambling through these accounts.

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