Hyderabad CP asks RBI to strengthen measures against mule accounts

Hyderabad: To further strengthen defences against financial crimes, Hyderabad Police Commissioner V C Sajjanar on Tuesday, April 21, proposed the formation of a Joint Working Group comprising representatives from the RBI, banking institutions, and the police to regularly review the issue of mule bank accounts.

In a letter addressed to RBI Governor Sanjay Malhotra, the Commissioner highlighted that “mule accounts” created in the names of unsuspecting individuals have become central to cyber fraud operations.

These findings emerged during the investigation of ‘Operation Octopus’ conducted by the city police, which exposed systemic vulnerabilities and alleged lapses in KYC verification processes at the branch level, a press release said.

In a move to combat rising cybercrimes, Sajjanar suggested certain critical changes in the banking system, stating that such reforms are necessary to dismantle organised syndicates operating across the country, the release added.

Hyderabad Police said on April 19 that it had dismantled a pan-India cyber fraud network involving bank officials by arresting 52 accused—32 bank officials, 15 mule account holders, and five middlemen across nine states under ‘Operation Octopus 2.0’.

Police said bank officials were found to be in connivance in the opening of mule accounts used to facilitate cyber fraud.

The commissioner urged the RBI to issue strict directives to all commercial banks to fix accountability on branch-level officials and recommended an immediate systemic audit to ensure proper implementation of KYC guidelines.

He expressed concern over instances where bank employees allegedly colluded with cybercriminals, citing a case at a Nashik branch of a private bank in Maharashtra where a KYC verifier allegedly misused a colleague’s credentials to create mule accounts for commissions.

Pointing out that such irregularities are predominantly seen in private banks, the letter emphasised the need to address structural flaws and proposed that any official arrested or chargesheeted for aiding cybercrime should be reported to the RBI for possible blacklisting.

Sajjanar also stressed the importance of banks adopting advanced technology to detect suspicious transactions in real time.

Alongside these systemic recommendations, the commissioner advised the public to remain vigilant against fraudulent advertisements on social media promising high returns.

He clarified that no law enforcement agency conducts interrogations via video calls or demands money under the pretext of ‘digital arrest’. It is a growing form of cybercrime in which fraudsters pose as law enforcement officers, court officials or personnel from government agencies to intimidate victims through audio and video calls. They hold the victims hostage and put pressure on them to pay money.

Warning citizens against the illegal practice of renting out bank accounts for commissions, he said account holders would be held legally responsible for any crimes committed through their accounts.