BY V SELVARAJAN
A Mule is born when a male donkey & female horse love each other and give birth to a young one. Therefore it is neither a horse nor a donkey. Going forward in the same line, let us try to understand as to what could be a money mule? It is so simple....If one account is opened to help a customer to save money and earn interest; he fails to do the normal genuine activity but joins a criminal who wants to transfer his illegal money into legal channel without opening an account.
Money mules can be used to launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who gain illegal access to deposit accounts by recruiting third parties to act as ‘money mules.’ In some cases these third parties may be innocent while in others they may be having complicity with the criminals. In a money mule transaction, an individual with a bank account is recruited to receive cheque deposits or wire transfers and then transfer these funds to accounts held on behalf of another person or to other individuals, after taking certain commission. Many a times the address and contact details of such mules are found to be fake or not up-to-date, making it difficult for enforcement agencies to locate the account holder.
With a view to preventing banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities Reserve Bank of India has issued guidelines on Know Your Customer (KYC) norms/Anti-Money laundering. The operations of such mule accounts can be minimised if banks follow the guidelines on Know Your Customer (KYC) norms, Anti-Money Laundering (AML) Standards, Combating of Financing of Terrorism (CFT) / Obligation of banks.
Money mules are in the increase and especially the cooperative banks are subject to the onslaughts of the Money mules. This may be perhaps due to the reason that many of the cooperative banks are still using the manual system for operations and effectively monitoring the accounts may be a challenge. In most of the cooperative banks, necessary internal control measures are not in place. Therefore RBI has asked co-operative banks to strictly follow know your customer norms to prevent their use by criminal elements for money laundering or terrorist financing activities.
"State and central Co-operative Banks are, therefore, advised to strictly adhere to the guidelines on KYC/AML/CFT. In order to protect themselves and their customers from misuse by such fraudsters, "the RBI said in a communication to chief executives of all state and central co-operative Banks.