Increasing number of money laundering and terrorism finance activities has made Reserve Bank of India generate alert to banks so that they can protect themselves from depositors acting as money mules.
Money muling occurs by way of an individual having a bank account getting recruited to receive check deposits or electronic transfers and once it so happens, the funds are transferred to the account of another individual.
Money mules are recruited by several means like spam e-mails, advertisements on genuine recruitment web sites, social networking sites, instant messaging and advertisements in newspapers.
These money mules when caught get their accounts suspended which leads to financial losses on the part of the bank.
Their addresses and contact information is mostly found to be fake. Thus know your customer (KYC) norms have to be followed strictly by banks. Also Anti-Money Laundering (AML) standards/ Combating of Financing of Terrorism (CFT) /Obligation of banks under Prevention of Money Laundering Act, 2002 need to be adhered to in order to prevent from money muling transactions.