What is a Mule Account?
Understanding Fake Bank Accounts and Their Role in Cybercrime in India
1. What is a Mule Account?
A mule account is an account created for illegal or fraudulent transactions. These are often referred to as fake accounts or multiple bank accounts used to facilitate unlawful financial activities.
Such accounts may be opened by a person or a scammer without the consent of the genuine account holder. They are primarily used for money laundering, cybercrime, and to move funds anonymously between different accounts.
2. Required Documents to Open a Bank Account in India
In India, banks must follow strict Know Your Customer (KYC) regulations to verify each new account. The following documents are essential for creating a bank account:
- Aadhaar Card
- PAN Card
- Mobile Number
- Professional Details
- Company Registration Documents (for Current Accounts)
3. How Scammers Create Fake Bank Accounts
Scammers gather the above documents through various deceptive or illegal methods, such as:
- Fake online loan applications
- Phishing attacks or scam websites
- Hacking into databases or user accounts
- Deceiving illiterate individuals into opening accounts
After obtaining or creating these accounts, scammers may either rent them out, buy them, or take full control of them to carry out cybercrime or money-laundering operations.
4. How Mule Accounts Are Related to Criminal and Terrorism Activities
Most transactions through mule accounts are connected to cybercrime or illegal financial transfers. When a mule account receives money from a fraudulent source, the account holder becomes legally liable — even if unaware of the crime.
A significant number of cryptocurrency-related transactions also involve mule accounts to convert crypto assets into Indian rupees. Since cryptocurrency is not recognized as legal currency in India, these transactions often violate existing financial regulations. The offence is punishable under Bharatiya Nyaya Sanhita, 2023 Act, Foreign Exchange Management Act and Prevention of Money Laundering Act 2002 Mule accounts are linked to criminal and terrorism financing networks.
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