In a major nationwide crackdown on cyber-enabled financial crimes, the central bureau of investigation (CBI) has launched searches at 42 locations across five states as part of its ongoing Operation Chakra-V, aimed at dismantling organised cyber fraud networks operating mule bank accounts.
The action follows a preliminary probe by the agency which uncovered an alarming 850,000 mule bank accounts opened in more than 700 branches of various banks across India. These accounts, often opened without proper know-your-customer (KYC) documentation and in violation of banking norms, have been widely used by cybercriminals for laundering funds siphoned through scams such as digital arrests, investment frauds, UPI-based frauds and impersonation rackets.
The coordinated operation spanned Rajasthan, Delhi, Haryana, Uttarakhand and Uttar Pradesh, and involved multiple CBI teams simultaneously searching premises of individuals and entities suspected to be involved in enabling the opening and operation of these accounts.
So far, nine individuals including middlemen, agents, bank correspondents, aggregators and account holders have been arrested for their alleged role in facilitating these fraudulent activities, the agency says.
The accused were allegedly part of a wider network that helped organised cybercriminals bypass standard due diligence processes, allowing them to move illicit funds quickly and discreetly.
According to the CBI, the scam involves collusion or negligence by certain bank officials, third-party agents and intermediaries, who either ignored or actively flouted KYC and anti-money laundering (AML) protocols. "Some bank branches failed to conduct initial or enhanced risk assessments, ignored suspicious transaction alerts, and did not send acknowledgment letters meant to verify customers' residential addresses."
The agency also highlighted violations of both the Reserve Bank of India (RBI)’s master circular and internal guidelines set by individual banks. A first information report (FIR) has been registered invoking serious charges including criminal conspiracy, cheating, forgery, and use of forged documents as genuine, as well as criminal misconduct by public servants under the Prevention of Corruption Act.
During the raids, investigators seized a cache of incriminating documents, mobile phones, bank account opening forms, transaction records and KYC papers. Several individuals involved in coordinating between cyber fraudsters and banking intermediaries have been identified and are now under the scanner.
CBI’s inquiry had initially begun as an enquiry to trace the larger conspiracy, focusing on understanding systemic loopholes in the banking ecosystem that were being exploited to set up these mule accounts. The scale of the operation revealed a deeply entrenched network thriving across state lines.
Mule accounts—bank accounts opened in the names of unwitting or complicit individuals—are a critical enabler in cybercrime operations. They are often used to collect, layer, and withdraw fraudulently obtained funds, making it difficult to trace the money trail or identify the primary perpetrators.
CBI emphasised that this crackdown is part of the Union government’s broader commitment to aggressively tackle cybercrimes, especially those involving financial frauds, by disrupting the support structures and intermediaries that allow such crimes to persist.
The arrested individuals are being presented before the court and further investigations are underway to trace additional beneficiaries and collaborators involved in the network.
This operation is expected to trigger increased scrutiny on the KYC practices of banking institutions and may prompt fresh directives from financial regulators to plug existing vulnerabilities.
The role of the Regulator, RBI, is unkn own.thus far. Can the regulator ignor such gross manipulation when their own circulars are ignored by banks? To add fuel to the fire, such fraudulent activities are facilitated by the arrogance of UDAI in not rectifying errors in the Aadhaar Cards issued by them. In fact, the RBI should initiate action against UDAI in this regard, as the Aadhaar Card being the heart of all financial transactions
The need to have a thorough inspection of banks particularly the way the banks manage KYC is long overdue and at the same time the way fraudulent accounts get opened freely without any KYC also deserves to be probed in detail to minimise frauds .