CBI to Question Bank Officials over 8.5 Lakh Mule Accounts in Pan-India Cyber Fraud Network

GG News Bureau
New Delhi, 1st July: The Central Bureau of Investigation (CBI) is set to begin questioning bank officials allegedly involved in facilitating the operation of nearly 8.5 lakh mule accounts across 743 bank branches in India, which were reportedly used by cybercrime syndicates to launder illicit proceeds from digital frauds.

According to officials, the investigation — now formalised into a full-fledged FIR after a two-month-long preliminary inquiry — has uncovered a nationwide conspiracy involving systemic lapses and deliberate negligence by unidentified banking personnel. These accounts, flagged as either “cyber mule” or “money mule” accounts, were frequently used for suspicious high-volume transactions that escaped regulatory scrutiny.

Major Lapses in Compliance and Oversight
The CBI said a critical failure by banks was not filing Suspicious Transaction Reports (STRs), even when transaction patterns clearly violated monetary thresholds mandated by the Reserve Bank of India (RBI). The FIR also highlights that Customer Due Diligence (CDD) — essential for risk assessment and identity verification — was routinely ignored during account openings.

“These oversights meant that the financial crime risks posed by customers were never properly assessed,” the CBI noted, adding that in many cases, accounts were opened using forged documents or without the account holder’s knowledge or consent.

Role of Middlemen and Banking Correspondents
The CBI probe has unearthed a nexus involving middlemen, banking correspondents, and corrupt officials. These intermediaries allegedly colluded to open mule accounts, particularly exploiting illiterate and uninformed individuals, whose identities were misused to operate accounts involved in laundering cybercrime proceeds.

Many of these mule accounts were opened via banking correspondents rather than through standard branch procedures, enabling access to UPI and digital payment platforms without adequate oversight.

Violation of RBI Guidelines
The FIR also accuses banks of failing to implement Enhanced Due Diligence (EDD) protocols, especially in regions with a high density of mule accounts. This includes not verifying the source of funds, intended purpose of the account, and not issuing acknowledgment or verification letters post-account creation — a breach of internal circulars meant to prevent such fraud.

Arrests and Future Action
The CBI has arrested 10 individuals and named 37 accused in the FIR so far. Investigators believe more arrests could follow as questioning of bank personnel begins.

“This is not just a failure of systems but a grave lapse in ethical and regulatory responsibility,” a senior CBI officer said, indicating that top bank officials could also be brought under the scanner if their role in enabling these transactions is established.

The agency is coordinating with RBI and other financial watchdogs as it moves forward in unravelling one of the largest digital financial fraud conspiracies in recent years.