Reserve Bank of India’s (RBI) AI-powered solution, MuleHunter.AI, is set to significantly benefit smaller banks, including small finance banks, cooperative banks, and rural banks, in their fight against mule account frauds. Unlike larger banks that already possess advanced systems for the rapid detection of such accounts, smaller banks often lack the resources to develop similar infrastructure. MuleHunter’s artificial intelligence (AI) and machine learning capabilities will now give these banks a critical edge in efficiently identifying fraudulent accounts.
RBI governor Shaktikanta Das, on Friday, announced the introduction of MuleHunter.AI as part of the Reserve Bank’s ongoing efforts to combat and prevent digital fraud. Developed by the Reserve Bank Innovation Hub (RBIH), MuleHunter.AI is an artificial intelligence and machine learning based model which helps banks to detect money mule accounts more efficiently.
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“MuleHunter is basically an infrastructure level setup we are creating which will use the databases from all banks, all other payment system operators, and its AI engine will be trained based on this wide set of data to be able to identify frauds, etc, much more effectively in the financial system,” said T Rabi Sankar, deputy governor, RBI in post policy press conference on Friday.
“Any entity, any payment system operator, any bank, any credit card network, every entity is free to use their own fraud detection systems. They will probably be used over and above this,” he added. Experts noted that small banks often detect mule accounts with a delay, giving perpetrators enough time to escape after committing financial crimes. “Speed plays a key role in the fight against mule account related frauds. While large banks, with the help of their strong IT infrastructure, are able to detect mule accounts quickly, smaller players such as small finance banks, cooperative banks and regional rural banks are slow in responding to the mule account-related frauds,” said head of digital banking of a small finance bank.
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A mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts make it difficult to trace and recover the funds. Private players say that banks will need to partner with technology service providers in their fight against mule accounts.
“RBI’s launch of MuleHunter.AI marks a significant step forward in the fight against financial frauds involving mule accounts. These frauds have become a significant challenge for the banking industry and the Indian economy, with some large banks reporting fraudulent transactions of Rs 400-500 crore every month,” said Jaya Vaidhyanathan, CEO, BCT Digital. “In a notable move, the Centre recently froze around 4.5 lakh mule bank accounts in the past year, showcasing the scale and urgency of the issue,” she added.