The Central Bureau of Investigation (CBI) will soon begin questioning bank officials linked to a widespread cyber fraud involving 8.5 lakh mule accounts across 743 bank branches nationwide. The accounts are allegedly part of a large-scale conspiracy with cyber crime networks to launder illegal funds.
The CBI registered an FIR following a two-month-long inquiry, which revealed that many of these accounts were opened and operated without proper customer verification. Officials stated that banks failed to generate Suspicious Transaction Reports (STR) despite large, rapid transactions, a key red flag under Reserve Bank of India (RBI) guidelines.
According to the FIR, bank staff also did not conduct Customer Due Diligence (CDD) during account openings, missing crucial steps like risk assessment and accurate identity checks. This serious lapse allowed cyber criminals to misuse accounts opened using forged documents or without the knowledge of the account holders.
The agency has named 37 people in the FIR and arrested 10 individuals during recent raids. The inquiry highlighted two types of mule accounts: ‘cyber mule’ accounts with limited activity and ‘money mule’ accounts showing frequent large transactions that exceeded threshold limits.
The CBI found that several accounts were opened by banking correspondents, bypassing branch-level scrutiny. Many of these accounts belonged to illiterate individuals and were misused for UPI and online transactions without proper consent or knowledge.
Additionally, the banks did not issue ‘Thank You’ letters or acknowledgments post account opening, which are essential for verifying the customer’s address. The role of middlemen has also come to light, with the CBI alleging that they worked with bank staff and correspondents to open and manage mule accounts that received proceeds from cyber fraud victims.
The CBI has further alleged that banks failed to follow ‘enhanced due diligence’ practices, especially in areas where multiple suspicious accounts were found. Bank staff often ignored collecting key information such as the source of funds or the purpose of the customer’s business relationship.
This case sheds light on serious lapses in banking oversight and highlights the need for strict compliance with RBI norms to prevent the misuse of financial systems by cyber fraud networks.
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