Mule Bank Account

GS 3 Economy

Context:
The Reserve Bank of India (RBI) has introduced an AI-powered solution, MuleHunter.AI, to address digital fraud involving mule bank accounts. Developed by the Reserve Bank Innovation Hub (RBIH) in Bengaluru, this AI/ML-based tool is designed to be more precise than traditional rule-based systems, which often generate numerous false positives.

What is a Mule Bank Account?
A mule bank account refers to a bank account exploited by criminals for illegal activities, such as money laundering or transferring illicit funds. These accounts may be used with or without the account holder’s full knowledge.

How Criminals Exploit These Accounts:

• Criminals often purchase accounts from individuals in lower-income groups or those with limited technical knowledge.
• In some cases, innocent victims unknowingly permit their accounts to be used, while in others, they are coerced into participation.

Money Mule:
The term “money mule” describes individuals whose accounts are used for laundering stolen or illegal money. These individuals often face legal consequences and police investigations, while the real perpetrators evade detection.

Importance of AI/ML Solutions:
The traditional rule-based systems, though effective to some extent, are prone to high false positives, misidentifying legitimate accounts. MuleHunter.AI, with its AI/ML-driven approach, significantly enhances fraud detection accuracy by learning and adapting to evolving fraud patterns.

This initiative underscores the RBI’s commitment to leveraging advanced technology to combat financial fraud and protect the integrity of the banking system.