RBI Introduces AI to Curb Financial Frauds: How MuleHunter.ai Will Tackle Mule Accounts

The Reserve Bank of India (RBI) has introduced an artificial intelligence (AI) model called MuleHunter.ai in an effort to combat digital fraud in the financial sector. RBI governor Shaktikanta Das informed on Friday that the model is Developed under its subsidiary Reserve Bank Innovation Hub (RBIH), and also encouraged banks to collaborate with them for better enhancement of the model.

The AI-based system will help banks to identify mule bank accounts and contain their operations, further reducing the cases of fraud, said Das while announcing key decisions made by the Monetary Policy Committee (MPC). A pilot program with two major public sector banks has already shown promising results.

According to National Crime Records Bureau (NCRB), online financial frauds constitute 67.8 per cent of all cybercrime complaints received in Q2 2022.

About Mule Account

A mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts makes it difficult to trace and recover the funds. As per RBIH, a significant challenge in preventing financial fraud is the use of money mule accounts.

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RBIH then conducted extensive consultations with banks to understand the existing methods and processes employed to identify and report these money mule accounts. It said that the static rule-based systems used for detecting mule accounts result in high false positives and longer turnaround times. As a result, many such accounts remain undetected.

However, RBIH claimed that this newly built system and its advanced ML algorithms can analyse transaction and account detail-related datasets to predict mule accounts with higher accuracy and greater speed than typical rule-based systems.

RBI is in the constant process of preventing and fighting financial fraud and also collaborating with many banks. It is also hosting a hackathon titled "Zero Financial Frauds," featuring a challenge focused on addressing the problem of mule accounts. The initiative aims to encourage innovative solutions to prevent the misuse of these accounts in financial crimes.