Banks step up vigil on fraudulent account opening via digital banking channels
digital banking channels. This is a practice usually followed by lenders while opening credit accounts, but is now being replicated for deposit accounts too, according to three people in the know.
This comes at a time when banks are trying to weed out mule accounts —accounts which receive funds from illegal sources or through fraudulent transactions — from their systems. Reserve Bank of India governor Shaktikanta Das had at a July 3 meeting urged bank chief executives to step up their fight against such accounts.
“Some of the largest banks in the country could be processing around Rs 300-400 crore worth of fraudulent transactions through mule accounts on a monthly basis; for mid-tier banks, the amount could be around Rs 50-100 crore. This is becoming a serious problem for banks as digital payments become more ubiquitous,” a senior banker with a private sector bank said on the condition of anonymity.
A mule account is typically opened through forged documents and used as a pass through for illegal funds to be moved across multiple accounts, eventually to be taken out of the country via cryptocurrency or cashed out through multiple ATM transactions.“Mule accounts are not new to the banking world, but digital banking channels have made account opening that much easier, resulting in massive growth in mule accounts. Now banks are being driven by the regulator and the government to act against such accounts,” said Ankit Ratan, cofounder of Signzy which offers online identity verification service to banks. Now
