Over 8,000 Mule Accounts Frozen in J&K; Massive Digital Money Laundering Racket Unearthed

NEW DELHI/SRINAGAR/JAMMU, Feb 15: In a major crackdown on financial crime, security agencies have identified and frozen more than 8,000 mule accounts operating across Jammu and Kashmir over the past three years, exposing what officials describe as a sophisticated and deeply entrenched money laundering network. Authorities believe these accounts form the financial backbone of global cyber fraud syndicates and warn that funds routed through them may also be vulnerable to misuse for separatist or anti-national activities.

Officials termed mule accounts as the most critical link in the cybercrime chain. Without such accounts, they said, fraudsters would find it extremely difficult to receive stolen money and convert it into untraceable cryptocurrency. These accounts act as temporary holding platforms where illicit funds are parked, layered, and then swiftly transferred across multiple channels to mask their origin.

Central security agencies have directed the Jammu and Kashmir Police and other law enforcement bodies to initiate consultations with banks and financial institutions to curb the rapid proliferation of mule accounts. Investigators are particularly focusing on identifying middlemen, commonly known as mulers, who play a silent but decisive role in facilitating these operations.

Officials suspect that after the 2017 crackdown by the National Investigation Agency on illicit funding channels in Jammu and Kashmir, anti-national elements may have adapted to a digital hawala model. Under this emerging system, commissions earned by mule account holders or mulers could potentially be diverted towards unlawful activities.

A muler is rarely the individual who directly contacts victims or circulates fraudulent links. Instead, the role is covert and logistical. Mulers arrange and maintain a steady supply of bank accounts that scammers use to receive and transfer stolen funds without exposing their own identities. Often, ordinary individuals are lured with promises of easy money and assured that the accounts will only be used temporarily as parking accounts. In many cases, they are persuaded to hand over complete control of their bank accounts, including net banking credentials.

Investigations have revealed that a single scam operator may be provided with 10 to 30 mule accounts at a time. In certain instances, bank accounts are opened in the names of fictitious firms, enabling transactions of up to Rs 40 lakh in a single day without immediately triggering suspicion. The money trail is intentionally fragmented, with funds rapidly transferred across multiple accounts and broken into smaller transactions to evade detection.

Security agencies have stressed that mule account holders cannot be treated merely as passive participants. By knowingly sharing credentials and accepting commissions, they become active facilitators of money laundering and provide the essential financial infrastructure that sustains transnational cybercrime networks.

A detailed assessment by central agencies has also pointed to cross border linkages. Individuals based in countries such as China, Malaysia, Myanmar and Cambodia are allegedly directing operatives in the Union Territory to establish private cryptocurrency wallets. These wallets are frequently created using virtual private networks to conceal digital footprints and often bypass Know Your Customer norms.

In response, the Jammu and Kashmir Police has taken steps to suspend the use of VPN services in parts of the Valley, citing concerns that such tools are exploited not only by cybercriminals but also by terrorist and separatist elements to avoid surveillance.

Officials have reiterated that dismantling mule account networks is critical to safeguarding financial stability and national security. The investigation remains ongoing, with authorities committed to tracing the full extent of the network and strengthening preventive mechanisms to prevent the resurgence of such digital conduits.

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