rewrite this title and make it good for SEOIBA urges RBI to empower banks against money mule fraud

In a bid to curb cyber fraud involving mule accounts, banks are requesting the authority to freeze accounts used for illegal transactions without the need for prior approval from courts or law enforcement agencies. A working group formed by the Indian Banks’ Association has recommended that this issue be taken up with the Reserve Bank of India (RBI) for further consideration.

Under the Prevention of Money Laundering Act (PMLA), they lack the legal authority to freeze or block customer accounts without proper authorisation. Currently, banks can block accounts based on internal alerts. 

Mule accounts are often used by fraudsters to move illegal funds through the banking system. Although banks freeze many such accounts each year, fraudsters exploit system loopholes to open new ones quickly.

The report also suggested that banks identify and monitor accounts more prone to misuse as mule accounts. It proposed using the Election Commission’s database to verify individuals who open accounts using voter ID and Form 60 (when PAN is unavailable) and suggested limiting the number of transactions on such accounts.

To effectively tackle mule accounts, the report recommended a technology-driven approach. The use of Artificial Intelligence (AI) and Machine Learning (ML) in monitoring transactions can help detect suspicious activities, anticipate fraudulent patterns, and strengthen the financial system.

A coordinated effort involving technological investment, staff training, and collaboration between banks, regulators, law enforcement, and technology providers is essential.

The report presents a strategic plan to address mule account-related fraud. Successful implementation will depend on the joint commitment of all stakeholders to ensure the security and integrity of the financial ecosystem.