When scammers use your bank account: The growing threat of mule accounts

In another case, a villager from Haryana fell victim to a scammer offering trading tips. The scammer gained access to his bank account and used it to commit fraud. When a woman reported being scammed, the unsuspecting villager was caught in place of the real culprit.

Indianexpress.com spoke to Tyagi and Ankush Mishra, deputy superintendent of police, of the Cyber/Special Task Force in Dehradun, in detail, to understand how mule accounts work and why they’re so dangerous.

According to Mishra, two key terms are involved:

🎯Shell companies: These entities exist only on paper. They appear legitimate but have no operations. Often used to open accounts that disguise criminal activity.

🎯Mule accounts: Much like a mule carries a load, these accounts are used to transfer stolen money. The account holders may be unaware, or they may knowingly lend their identities for small sums.

“When India’s cybercrime helpline 155260 (now replaced by 1930) was launched, authorities gained the ability to freeze accounts, where scam money was being credited, quickly. Scammers adapted by routing stolen money through mule accounts to make detection harder,” said Tyagi.

A ‘money mule’ refers to an individual enlisted to receive and transfer funds acquired through fraudulent activities. This role is pivotal in the execution of various financial crimes. The involvement of money mules introduces an additional layer of complexity, making it challenging for law enforcement to trace the origins of illicit transactions. There are two kinds of money mules:

🎯Unwitting victims: Tricked into sharing Aadhaar or PAN details for fake government schemes. Scammers use these to open accounts without the person’s knowledge.

🎯Willing participants: Sell access to their bank accounts in exchange for small commissions

Initially, scammers targeted daily wage earners, rickshaw drivers, and slum residents—offering Rs 500–3,000 to open accounts. “Many of them, due to limited education and awareness, agreed, unaware their names were being used in financial crimes,” said Tyagi.

Now, students are common targets, and are promised two per cent commissions on monthly transactions in return for giving access to their accounts. When fraud happens eventually, the police track the account where the money landed, and account holders get caught. In most mule account cases, the person whose name is on the account ends up being a victim too—their account gets frozen by cyber police, and they lose access to their own money,” said Tyagi.

“The real scammers remain hidden. It’s the account holder who ends up being traced, losing access to their own money,” Mishra said.

According to CloudSEK’s Threat Intelligence Team’s report, money mules are often recruited by “agents” through Telegram channels or personal networks. These agents pretend to run successful businesses needing help managing large transactions. In 2023, CloudSEK continued its investigation and uncovered a network of money mules, posing a significant risk to the Indian banking ecosystem. This report focuses on a malicious mobile application (APK) identified as a key tool for on-boarding and managing these money mules.

“As an investigating officer, the biggest challenge is tracking down the real culprit especially in case of money laundering,” said Mishra.

What can individuals do to protect themselves?

If someone suspects that their PAN card or bank account is being misused, it is important they come forward and report it. Once they do, the police can alert the bank and take the necessary steps to prevent any further damage.

🟡 Do not share your personal and bank details with anyone including family members, especially bank account details, PAN card and Aadhar details.

🟡Do not accept payments from or send money to unknown people: Potential victims will not be able to identify the nature of money, it was obtained through what modes.

Mule accounts are the perfect example of how easily unsuspecting citizens can turn into victims and sometimes into unintentional accomplices.

The Safe Side

As the world evolves, the digital landscape does too, bringing new opportunities—and new risks. Scammers are becoming more sophisticated, exploiting vulnerabilities to their advantage. In our special feature series, we delve into the latest cybercrime trends and provide practical tips to help you stay informed, secure, and vigilant online.