The Reserve Bank of India’s (RBI) AI-based solution, MuleHunter.AI, is expected to significantly benefit small banks, including small finance banks, cooperative banks and rural banks, in their fight against fraud to mule accounts. Unlike large banks that already have advanced systems to quickly detect such accounts, smaller banks often lack the resources to develop similar infrastructure. MuleHunter’s artificial intelligence (AI) and machine learning capabilities will now give these banks a crucial advantage in effectively identifying fraudulent accounts.
RBI Governor Shaktikanta Das on Friday announced the introduction of MuleHunter.AI as part of the Reserve Bank’s ongoing efforts to combat and prevent digital fraud. Developed by the Reserve Bank Innovation Hub (RBIH), MuleHunter.AI is a artificial intelligence and a machine learning-based model that helps banks detect money mule accounts more efficiently.
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“MuleHunter is basically an infrastructure level setup that we are creating that will use the databases of all the banks, all the other payment system operators, and its AI engine will be trained based on this broad data set to be able to identify frauds etc more effectively in the financial system,” said T Rabi Sankar, Deputy Governor, RBI at a post-policy press conference on Friday.
“Any entity, any payment system operator, any bank, any credit card network, every entity is free to use its own fraud detection systems. They will probably be used on top of that,” he added. Experts noted that smaller banks often detect mule accounts with some delay, giving perpetrators ample time to escape after committing financial crimes. “Speed plays a key role in combating mule account fraud. While large banks, with their strong IT infrastructure, are able to quickly detect mule accounts, smaller players such as small finance banks, cooperative banks and regional rural banks are slow to respond to mule account frauds” , said the director. of digital banking of a small financial bank.
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A mule account is a bank account used by criminals to launder illicit funds, often created by unsuspecting individuals lured by promises of easy money or coerced into participating. Transferring funds through these highly interconnected accounts makes it difficult to trace and recover funds. Private actors say that banks will have to partner with technology service providers in their fight against mule accounts.
“The launch of MuleHunter.AI by RBI marks a significant step forward in the fight against financial fraud involving mule accounts. These frauds have become a significant challenge for the banking sector industry and the Indian economywith some major banks reporting fraudulent transactions of Rs 400-500 crore every month,” said Jaya Vaidhyanathan, CEO, BCT Digital. “In a notable move, the Center recently froze around 4.5 lakh mule bank accounts over the past year, demonstrating the scale and urgency of the problem,” she added.