Security agencies bust massive ‘mule account’ network in J&K; fear misuse by terror groups

Security agencies have cracked down on a growing ecosystem of “mule accounts” in Jammu and Kashmir that served as the financial backbone of global fraud networks; authorities fear that funds diverted through these accounts could be used for separatist and anti-national activities.

More than 8,000 mule accounts operating in the region were identified and frozen over a three-year period, revealing a complex money laundering network, authorities said.

They described these accounts as the “weakest but most important link” in the cybercrime chain; because without them it would be impossible to convert stolen money into untraceable cryptocurrency.

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They said the central security agencies have asked the Jammu and Kashmir Police and other law enforcement agencies to hold consultations with banks to prevent the mushrooming of ‘mule accounts’ and identify middlemen, often called ‘mule drivers’, who facilitate such financial frauds.

Authorities suspect that after the National Investigation Agency’s 2017 crackdown on illegal money flow into Jammu and Kashmir, anti-national elements may have shifted to a newer model of “digital hawala” where commissions earned by mule account holders or muleteers can be used for activities against the country.

A muleteer is not usually the person who contacts victims or sends fake links. Instead, their role is hidden but critical; regularly organizing and maintaining mule accounts that fraudsters use to receive and transfer stolen money without revealing their identities.

These mule accounts often belong to ordinary people who are deceived by the promise of “easy commissions” and guaranteed minimum risk. They are persuaded to hand over full control of their bank accounts, including their net banking credentials, under the pretext that the accounts will be used as “parking accounts” for a short period of time.

A single fraudster is often provided with 10 to 30 mule accounts at a time and in many cases, bank accounts are opened in the name of fictitious companies, allowing large transactions of up to ₹ 40 lakh in a single day without immediate alarm.

Authorities said the fraudulent money was quickly transferred to various accounts and split into smaller transactions to avoid detection, leaving the money trail deliberately disorganized.

Central security agencies and other law enforcement agencies have emphasized that mule account holders are active facilitators of money laundering even though they do not engineer fraud or talk to victims. By sharing identity information and accepting kickbacks, they knowingly provide the “financial infrastructure” for transnational crimes.

“The entire fraud ecosystem depends on these accounts. When the money is not targeted, the fraud fails at the first step. Those who rent the accounts are not just victims; they are the engines of crime,” a senior official said.

A detailed study by central security agencies found that individuals in countries such as China, Malaysia, Myanmar and Cambodia are directing people in the union territory to create private crypto wallets that are typically set up using a Virtual Private Network (VPN) to avoid detection and do not require Know Your Customer (KYC) or identity verification.

Jammu and Kashmir Police has already suspended the use of VPN in the valley as it is a useful tool for both terrorists and separatists to avoid detection.