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BankingNABARD / RBI

Mule Account Freezing: Banks Seek Power Without Court Nod

15 April 20251 min read
BANKING & FINANCEMule AccountFreezing: BanksSeek PowerWithout Court Nod15 April 2025safalsetu.com

Why in the news

To tackle cyber fraud, lenders asked to freeze suspect accounts themselves, which current law does not allow.

Key facts

  • Mule accounts carry illegal funds and make tracing harder.
  • Thousands are frozen yearly, yet new ones appear quickly through loopholes.
  • Law in question: PMLA.
ProposalIdea
VerificationCheck and restrict accounts prone to misuse
TechnologyAI/ML in transaction monitoring
Election Commission dataVerify voter ID or Form 60 where PAN is missing
Transaction capLimit transactions on accounts without permanent verification
CooperationInvestment, training, banks-regulators-LEAs-tech firms working together

Exam angle

  • Body: Indian Banks’ Association; terms: mule account, Form 60, LEAs.

Test yourself

1. Under which law do banks currently lack power to block accounts without legal authorisation, per the mule account notes?

The notes cite the PMLA as the legal limit on freezing.

2. Which body's working group report detailed the proposals to curb mule accounts?

The measures are detailed in an Indian Banks' Association working group report.

3. What do fraudsters use mule accounts for?

Mule accounts help move illicit money and hinder tracing.

This topic is part of Daily Current Affairs 15 April 2025 (22 topics).

All topics of the dayDay quizApril 2025

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