Security agencies have detected a fast-growing network of so-called “mule accounts” in Jammu and Kashmir, which investigators say is emerging as a key financial channel for international scam syndicates. Officials fear that funds routed through these accounts could eventually be diverted to support separatist or other anti-national activities, according to PTI.
Over the last three years, more than 8,000 such accounts have been identified and frozen across the Union Territory, exposing what authorities describe as a well-organised system for laundering illegal proceeds. Investigators say mule accounts are among the weakest links in the chain, yet they remain crucial for cybercriminals.
Without these accounts, fraudsters would find it difficult to move stolen money into hard-to-trace digital assets like cryptocurrency.
With the threat escalating, central security agencies have asked the Jammu and Kashmir Police and other enforcement authorities to coordinate with banks to curb the spread of mule accounts. Efforts are also underway to identify and act against intermediaries, often referred to as “mulers”, who facilitate these operations.
Officials point out that after the National Investigation Agency (NIA) intensified action against illegal funding channels in 2017, networks hostile to the state appear to have changed tactics. Instead of conventional methods, they are believed to be relying on what officials term a “digital hawala” mechanism.
Under this system, commissions paid to mule account holders and mulers may be redirected towards activities seen as harmful to national security.
Typically, a muler does not directly engage with scam victims or circulate fraudulent messages. However, their role is central. They recruit individuals willing to provide bank accounts and manage a pool of such accounts, allowing scammers to transfer and layer stolen money while keeping their identities hidden.
Many of the account holders are ordinary people lured by promises of quick and easy income, often assured that the arrangement carries little risk. They are persuaded to hand over complete access to their bank accounts, including online credentials, on the pretext that the accounts will only be used temporarily as “parking” channels.
In reality, these accounts become tools for laundering proceeds of cyber fraud.
Investigations suggest that a single scam operator may control between 10 and 30 mule accounts at a time. In some cases, shell companies are used to open accounts, enabling high-value transactions—sometimes up to Rs 40 lakh in a day—without drawing immediate scrutiny.
Funds are deliberately moved through multiple accounts and broken into smaller transfers to bypass monitoring systems.
Security officials stress that even if mule account holders are not directly involved in deceiving victims, they remain legally accountable for facilitating money laundering. By sharing access to their accounts and accepting commissions, they enable the broader criminal network to function.
“The entire scam ecosystem rests on these accounts. Without a channel to move the money, the fraud collapses at the first stage. Those who rent out their accounts are not mere bystanders—they are an integral part of the operation,” a senior official was quoted as saying.
A detailed assessment by central agencies has also indicated that handlers based in countries such as China, Malaysia, Myanmar and Cambodia are allegedly instructing recruits in Jammu and Kashmir to set up private cryptocurrency wallets. These wallets are often created using Virtual Private Networks (VPNs) to conceal digital footprints and frequently bypass Know Your Customer (KYC) requirements.
Officials added that the regional police have already imposed restrictions on VPN usage in the valley, citing concerns that such tools are also exploited by terrorists and separatist elements to evade surveillance.