Reserve Bank of India (RBI) governor Shaktikanta Das asked banks to step up efforts against ‘mule accounts’ and also intensify customer awareness and education initiatives, among other measures, to curb digital frauds.
A mule account is an account created by one person but operated by another person.
These accounts are often used for money laundering and tax evasion.
Currently, these frauds account for around 55 per cent of all frauds in India.
Mule accounts are in violation of several rules and can be prosecuted under the Prevention of Money Laundering Act (PMLA).
Such transactions are illegal under tax laws. Even SEBI and RBI rules say such accounts should not be used.