Mule account detection is software that finds bank accounts used to pass stolen money along, so that the bank can stop them. A mule account is an account that a criminal uses to receive stolen money and send it on quickly, so that the money is hard to trace. The account may be opened with false details, or a real person may rent out their account for a small payment, sometimes without understanding the crime.
India sees many mule accounts because online fraud often ends with a quick UPI transfer. For instance, a person tricked by a fake investment scheme sends ₹1 lakh. The money goes into a mule account and is split into other accounts within minutes. Banks are under pressure from the RBI and the police to find such accounts early.
The software looks for three kinds of signs. First, the money flow: many payments from unrelated people, followed by almost all of the money leaving quickly. AML transaction monitoring supplies these flows. Second, the device: device fingerprinting recognises a phone, and the same phone may be used for several accounts. Third, the account's start: a new account, opened recently, that suddenly receives large sums. The KYC check at opening and identity verification can also reveal false details.
The software combines these signs into a score. A high score sends the account for review, and the bank may freeze it while an investigator looks at it in AML case management.