Banks Tackle Cyber Fraud: The Battle Against Money Mule Accounts

Banks are seeking authority to freeze mule accounts used in cyber fraud. Currently limited by the Prevention of Money Laundering Act, they propose tapping into Election Commission data for verification. Banks aim to integrate AI and ML to preemptively combat illicit money channels.

Banks are doubling down on their efforts to combat cyber fraud by targeting mule accounts, which are often used to funnel illicit transactions. However, the existing legal framework, under the Prevention of Money Laundering Act, restricts banks from freezing accounts without official authorization.

In response, the Indian Banks' Association has suggested empowering banks to freeze these accounts more swiftly, potentially tapping into Election Commission data for better individual verification. This move aims to foil the swift adaptability of fraudsters who exploit loopholes in account creation.

The report advocates for a technology-driven defense using Artificial Intelligence and Machine Learning in transaction monitoring. By doing so, banks can effectively anticipate criminal activities and safeguard the financial ecosystem. The proposal demands collaboration among financial entities, regulators, and law enforcement for a more secure banking landscape.

(With inputs from agencies.)