In view of the rise in financial crimes and frauds, the National Payments Corporation of India (NPCI) is running a pilot programme for identification of mule accounts based on payment system data, said Ajay Kumar Choudhary, non-executive chairman and independent director. Terming the situation in India as ‘equally alarming’, he said cyber criminals have siphoned off more than Rs 1,750 crore in the first four months of the current calendar year.
“Among multiple efforts at different organisations, a pilot is also being run on identification of mule accounts by NPCI, based on payment system data, and banks are now being sensitized on the outcome of these models,” Choudhary said at the Global Fintech Fest.
His comments come amid concerns raised by Reserve Bank of India (RBI) governor Shaktikanta Das about mule accounts. He has asked banks to strengthen customer onboarding and transaction monitoring systems to check unscrupulous activities. The RBI is working with banks and law enforcement agencies to check mule accounts and digital frauds.
Mule accounts are owned by people who are duped by fraudsters into laundering illegal money via their bank accounts. When such incidents are reported, the money mule becomes the target of investigations due to their involvement.
Choudhary said the increasing sophistication of fraud, often leveraging AI and cryptocurrencies, poses significant challenges. “Criminals have adapted quickly to new defences, utilising technologies like deepfake fraud and human-operated ransomware attacks to perpetrate complex scams at minimal cost.”
“The role of money mules further complicates these efforts, adding layers of difficulty in tracing illicit funds,” he said.
The NPCI chairman said financial crime and frauds not only threaten the stability of financial systems, but also have profound social impacts, exploiting vulnerable populations and undermining economic stability. “In India, the situation is equally alarming, with cybercriminals siphoning off over Rs 1,750 crore in the first four months of 2024,” he said.
According to Choudhary, the NPCI has been at the forefront of these efforts, implementing a comprehensive cybersecurity framework and leveraging advanced technologies like machine learning and artificial intelligence to detect and prevent fraud in real time. NPCI’s initiatives, including real-time fraud risk monitoring and management solution and public awareness campaigns, are pivotal in safeguarding the financial ecosystem.“As financial crimes continue to evolve, it is essential to not only embrace new technologies but also strengthen cooperation and creating awareness among all stakeholders. This collaborative approach is necessary to protect the integrity of our financial systems,” he added.
