Lenders look to use poll panel data to identify mule accounts

In a move to combat financial fraud, banks are looking to verify and restrict accounts most vulnerable to misuse as 'mule' accounts for channelling illicit money, multiple people aware of the development said.

Banks have proposed using the Election Commission database to verify individuals who open accounts using voter identification cards and Form 60 - in the absence of a permanent account number, or PAN - and capping the number of transactions on such accounts.

A committee formed by the Indian Banks' Association (IBA) has also recommended integrating cybersecurity teams of all banks under a unified framework to enable faster, real-time action, including freezing of accounts immediately upon the reporting of fraud, officials said. "These recommendations have been shared with all stakeholders, including the Reserve Bank of India (RBI) and also the Telecom Regulatory Authority of India, and are being examined," a finance ministry official said.

A bank executive said, "Annual income is one of the major parameters for generating red flag indicators, and that is why there should be a limit on transactions from accounts without a PAN number."

Red flag indicators are specific warning signs suggesting potential suspicious transactions. Banks can allow a greater number of transactions after conducting due diligence of individual customers, the executive said.

"We have also suggested restricting the ability to change mobile numbers through ATMs or online banking services for newly onboarded customers to prevent unauthorised modifications and enhance security," he said.

The panel has highlighted demographic hotspots such as Bharatpur, Mathura, Nuh, Deoghar, Gurgaon and Alwar, urging banks to take extra precautions while opening new accounts in these areas.