RBI/2010-11/303
DBOD. AML. BC. No. 65/14 .01.001/2010-11
December 7, 2010
The Chairmen/CEOs of all Scheduled Commercial Banks (excluding RRBs)
/ All India Financial Institutions/Local Area Banks
Dear Sir,
Operation of bank accounts & money mules
With a view to preventing banks from being used, intentionally or
unintentionally, by criminal elements for money laundering or terrorist
financing activities Reserve Bank of India has issued guidelines on Know Your
Customer (KYC) norms/Anti-Money Laundering (AML) standards/ Combating of
Financing of Terrorism (CFT) that are consolidated in the Master Circular
DBOD.AML.BC.No.2/14.01.001/ 2010-11 dated July 01, 2010.
- It has been brought to our notice that “Money mules” can be used to
launder the proceeds of fraud schemes (e.g., phishing and identity theft) by
criminals who gain illegal access to deposit accounts by recruiting third
parties to act as “money mules.” In some cases these third parties may be
innocent while in others they may be having complicity with the criminals.
- In a money mule transaction, an individual with a bank account is
recruited to receive cheque deposits or wire transfers and then transfer
these funds to accounts held on behalf of another person or to other
individuals, minus a certain commission payment. Money mules may be
recruited by a variety of methods, including spam e-mails, advertisements on
genuine recruitment web sites, social networking sites, instant messaging
and advertisements in newspapers. When caught, these money mules often have
their bank accounts suspended, causing inconvenience and potential financial
loss, apart from facing likely legal action for being part of a fraud. Many
a times the address and contact details of such mules are found to be fake
or not up to date, making it difficult for enforcement agencies to locate
the account holder.
- The operations of such mule accounts can be minimised if banks follow
the guidelines contained in the Master Circular on Know Your Customer (KYC)
norms /Anti-Money Laundering (AML) standards/ Combating of Financing of
Terrorism (CFT)/Obligation of banks under PMLA, 2002. Banks are, therefore,
advised to strictly adhere to the guidelines on KYC/AML/CFT issued from time
to time and to those relating to periodical updation of customer
identification data after the account is opened and also to monitoring of
transactions in order to protect themselves and their customers from misuse
by such fraudsters.
Yours faithfully,
(Vinay Baijal)
Chief General Manager