Your Bank Account Can Be Used For Fraud Without You Knowing. Here's How

Online Fraud: A cyber fraud worth Rs 77 crore spread across Gujarat and Goa surfaced just a few days ago. Sixteen people were arrested. Interestingly, the money did not move through one mastermind's account. It travelled through dozens of ordinary bank accounts. Police later called them mule accounts.

In another case, Delhi Police busted an interstate cyber fraud racket. Investigators found a chain of bank accounts used only to receive and pass on stolen money. The account holders were not the scam callers. They were the "pipes".

In Hyderabad, seven bank officials were arrested in Cyberabad. They were accused of helping open accounts that later became part of a mule network used for cyber fraud.

Across cities, the pattern is the same. Different scams. Same infrastructure.

The scams begin with phishing links, fake investment apps, job offers, impersonation calls, and UPI tricks. The stolen money does not stay where it lands. Within minutes, it is pushed into a second account. Then a third. Then withdrawn, converted, or transferred again. By the time police reach the first account, the trail is cold.

Those middle accounts are mule accounts.

What Are Mule Accounts?

A mule account is a real bank account used to move illegal money. It may belong to a student. A gig worker. A delivery agent. Or someone lured by a promise of easy commission.

They are told: "Receive Rs 50,000. Keep 5 per cent. Send the rest." Many do not realise they are stepping into a crime.

Varun Grover, Business Unit Head, mFilterIt, explains it sharply: "Mule accounts are essentially borrowed identities weaponised for financial crime; real bank accounts, operated by real people, deliberately placed between a fraudster and their stolen funds to make dirty money appear clean and legitimate."

The name on the account looks clean. The transaction passes system checks. The money looks legitimate.

But it is stolen.

How Mule Accounts Help Fraud Scale?

Earlier, cyber criminals needed to hide. Now they design systems. They do not steal and run. They architect networks.

Grover says: "They identify institutional blind spots, recruit human infrastructure across geographies, and engineer investigative exhaustion into every layer of their operation."

This is how fraud grows from thousands to crores without alarms. Funds move fast. Often in small amounts. This is called "micro-muling".

Siddharth Maurya, Managing Director, Vibhavangal Anukulkara, says: "Micro-muling is a new vector where large frauds are broken into smaller transactions that stay below the radar of traditional banking fraud systems."

A Rs 5 lakh scam may be broken into 40 small transfers. None look suspicious alone. Together, they hide a crime.

Maurya adds: "Mule accounts used to be seen as a banking loophole. Now, they are at the center of India's cyber fraud economy."

Why Investigators Struggle?

Once money passes through several mule accounts, tracing the source becomes difficult. Cash is withdrawn quickly. Or converted to crypto. Or moved across states.

Sharad Chand, Business Head - Wealth Management, Alankit Limited, says: "Once money is routed through mule accounts, it becomes extremely difficult for investigators to trace the original source, especially when funds are quickly withdrawn, converted to crypto, or transferred across multiple layers."

The person whose account was used often claims ignorance. Many times, that is true. But the legal trouble is real. Accounts get frozen. Police cases follow. Credit history suffers.

Who Gets Targeted To Become A Mule?

Students. Job seekers. Gig workers. People looking for quick income. They receive messages offering work-from-home tasks. Or commission for handling payments.

Maurya calls this a behavioural problem as much as a tech one. People chasing easy money do not see the risk. A bank account is no longer just a savings tool. In the wrong hands, it becomes part of a crime network.

What Can Stop Mule Networks?

Experts point to three fixes.

• Stronger KYC at the account opening stage: Banks must verify who is opening accounts and why.
• Real-time transaction monitoring: Dormant accounts suddenly receiving large funds. Rapid transfers across accounts. Unusual patterns. These must raise alerts.
• Public awareness: People must know that allowing someone to use their account for money transfers is a crime.

As Grover warns: "The real danger is not the account that gets frozen. It is the infrastructure that keeps operating after it does."

Catching one mule does not stop the network.