The RBI Innovation Hub has embarked on a pioneering initiative to curb financial frauds, particularly those involving mule accounts, through the development and implementation of cutting-edge technological solutions.
Mule accounts are bank accounts that serve as conduits in the laundering process, receiving funds from illicit activities and then transferring them to other destinations. A recent study conducted in collaboration with 10 banks revealed a prevalent reliance on rule-based systems for fraud detection. These systems, however, have proven insufficient in identifying suspicious transactions associated with mule accounts.
“A mule account will have in one day Rs 1 crore worth of transactions, although the declared income is Rs 50,000. We have done detailed study and realised that most of the banks have people sitting, when their transaction system flashes this, they contact the branch and delays 2-3 weeks and the scamsters have already moved away the money. We are working with IIT Kanpur to develop an AI model so that it can be detected in real-time, that is under development, Rajesh Bansal, CEO of RBI Innovation Hub, told ETBFSI.
Highlighting the significance of leveraging AI technology in fraud prevention, Bansal emphasised the importance of timely detection and intervention to safeguard the integrity of the financial system.
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“One of the important things is obviously trying reducing frauds using AI, improving detection in time, which will really go a long way. This year we have to work on that, 2-3 banks have tied up with us, and they are more than excited if they can help us solve this. Again, we are a public policy institution so they realise the benefits we can bring to the table,” Bansal said.
Grievance redressal platform
Moreover, the RBI Innovation Hub is actively addressing grievances related to banking services by conceptualizing an automated grievance redressal system.
This system, integrated across various digital channels, including chatbots utilised by platforms like Zomato and Swiggy, will enable customers to seek resolution for their complaints in real-time, enhancing trust and transparency in the banking sector.
“If you have a grievance with the bank, the banks do not have an automated system, although there is a digital footprint of that grievance, so we are conceptualising an automated grievance redressal system, the customer can get instant resolution of the complaint through the various channels that exist. Let’s say you are on a chatbot of a bank, you think you have been charged excessively, on the chatbot like Zomato and Swiggy, it can instantly resolve the complaint. That’s part of the trust work we are doing,” he said.
Read more: What is ‘Mule Accounts’ fraud? Experts suggest 5 safety tips
Mule accounts are essentially bank accounts that receive funds from illegal activities and then transfer them elsewhere, acting as a bridge in the laundering process.
