Introduction to 'Money Mule' Phenomenon

  • A 'money mule' is a person who allows their bank account to be employed by criminal elements to facilitate the transfer of funds procured illegally.
  • There has been a surge in the activities of money mules in recent times, especially within new accounts that are less than a year old.

Why 'Money Mules' Are in the News

  • Given the noticeable rise in the activities of money mules, banks have begun a thorough examination of new sole proprietorship and individual current accounts.
  • The purpose of this increased vigilance is to discourage money laundering and digital fraudulent activities.

The Method of Operation of 'Money Mules'

  • Criminals engage money mules to help launder their illegal funds, which may stem from various

sources like online scams, frauds, human trafficking, and drug trafficking.

  • The mules are utilised to establish a buffer between the victims and the criminals, making it more challenging for law enforcement authorities to track the funds.
  • Money mules are usually lured with promises of easy money via fake job advertisements and social media platforms. While some are aware of their participation in illegal operations, others might be oblivious.
  • Mules who get apprehended bear the legal brunt of facilitating money laundering, even if they were unaware of the illicitness of their actions.

Measures Employed by Banks to Combat 'Money Mule' Activities

  • Steps being employed by banks to curb the proliferation of money mules include verification visits, latitude data checks, and washout logic analysis.
  • The Reserve Bank of India is actively engaging in dialogue with banks to enhance existing measures against financial fraud, underlining the significance of this issue.

Probable Knowledge Based Questions (GK Part)

  • What is a 'money mule'?
  • How are 'money mules' recruited and what crimes are they associated with?
  • What measures are banks, in particular Indian Banks, taking to combat money mule activities?
  • What is the role of The Reserve Bank of India in this context?

This detailed information will be beneficial for a wide range of competitive exams, as it sheds light on a vital issue concerning money laundering and the preventative measures being implemented by banks, particularly in India. At the same time, it offers insights into the modus operandi of criminal perpetrators.