What are mule accounts? Govt’s new AI system aims to curb cyber fraud linked to bank accounts

In a major move to tackle rising cyber fraud, the government has announced a new partnership aimed at detecting and blocking suspicious bank accounts often used by scammers to move stolen money.

Union Home Minister Amit Shah said the Indian Cyber Crime Coordination Centre (I4C) has signed an MoU with Reserve Bank Innovation Hub (RBIH) to strengthen fraud detection across the banking and digital payments ecosystem.

“Modi govt is tirelessly working for cyber secure Bharat. Mule accounts are big hurdles in curbing cyber crimes. Today, the I4C under MHA signed an MoU with Reserve Bank Innovation Hub (RBIH) unleashing the power of Artificial Intelligence to combat cyber fraud. The move will swiftly detect and cull hidden mule accounts by feeding the data from the I4C's Suspect Registry to the AI-driven fraud detection system and serve the citizens as their next gen shield against cyber crime.,” Amit Shah said in a post on X.

What are mule accounts?

These accounts are commonly linked to online frauds involving fake investment schemes, phishing links, OTP scams and digital payment frauds.

AI to help banks detect fraud faster

According to the Ministry of Home Affairs, the collaboration will use Artificial Intelligence (AI) to identify suspicious transactions and hidden mule accounts more quickly.

“Today, the I4C under MHA signed an MoU with Reserve Bank Innovation Hub (RBIH), unleashing the power of Artificial Intelligence to combat cyber fraud,” Shah said.

The system will use data from I4C’s Suspect Registry and integrate it with AI-powered fraud detection tools such as MuleHunter.ai, which is already being implemented across banks.

Officials said the partnership aims to improve fraud-risk intelligence sharing and strengthen preventive systems before money is siphoned off from victims.

Why this matters for bank customers

As digital payments continue to grow rapidly in India, cyber fraud cases have also increased. The government’s latest move is aimed at making online banking and UPI transactions safer for ordinary users.