The Reserve Bank of India (RBI) on Friday asked banks to collaborate with its innovative artificial intelligence and machine learning (AI/ML) based model called MuleHunter.AI to deal with rising menace of mule accounts, which are used to execute digital frauds.
“Use of money mule accounts is a common method adopted by fraudsters to channel proceeds of frauds,” said RBI Governor Shaktikanta Das while unveiling the December 2024 monetary policy.
Das said the RBI is currently running a hackathon on the theme “Zero Financial Frauds” which aims to encourage development of innovative solutions to contain the menace of mule accounts.
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A mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts makes it difficult to trace and recover the funds.
As part of this hackathon, the cental bank has piloted an AI/ML based model called MuleHunter.AI, developed by its subsidiary the Reserve Bank Innovation Hub (RBIH).
{{/usCountry}}As part of this hackathon, the cental bank has piloted an AI/ML based model called MuleHunter.AI, developed by its subsidiary the Reserve Bank Innovation Hub (RBIH).
{{/usCountry}}This new innovative model enables banks to detect mule bank accounts in an efficient manner. The RBI said a pilot programme with two large public sector banks has yielded “encouraging” results.
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“Banks are encouraged to collaborate with RBIH to further develop the MuleHunter.AI initiative to deal with the issue of mule bank accounts being used for committing financial frauds,” Das added.
He said that the financial sector is seeing paradigm shifts with the introduction of technologies like Artificial Intelligence (AI)/ Machine Learning (ML), tokenisation and cloud computing that enable institutions to handle enormous volumes of data, automate complex processes, enhance decision-making, and bring in unprecedented efficiencies.
Thus, Das announced the formation of a committee to develop a Framework for Responsible and Ethical Enablement of AI (FREE-AI) in the financial sector. The committee will comprise experts with diverse experience and shall recommend “a robust, comprehensive, and adaptable AI framework for the financial sector”.
The central bank governor also said that the RBI has been taking various measures in coordination with banks and other stakeholders to prevent the menace of digital frauds. These include RBI guidelines for regulated entities to strengthen cybersecurity, cyber fraud prevention and transaction monitoring.
(With PTI inputs)