A 48 year-year old Bengaluru Electricity Supply Company (BESCOM) employee committed suicide after falling victim to a “digital arrest” scam. He lost Rs. 11 lakhs in the process. The proceeds of such crimes make their way to the mastermind cybercrooks through what is known as mule accounts. In simple terms mule accounts are fake / impersonated accounts exploited by criminals to facilitate illegal financial activities, in this case digital arrests, investment / loans scams etc. Exactly the opposite of it, in Bareilly, co-director of a company rented out firm’s accounts to fraudsters was held for aiding Rs.3.2 crore cyber fraud.
Police on Monday arrested the director for renting out his firm’s bank account to cybercriminals, who used it to siphon Rs. 3.2 crore from victims across 11 states. The money was later converted to USDT cryptocurrency and routed to wallets operating from Hongkong, complicating recovery efforts. Pradeep Kumar Singh, director of Narayani Infotech took Rs.75,000 in advance for allowing his firm’s account to be used for fraud. The rest of the payment was yet to be made. Police from 7-8 states were tracking him. Of the Rs. 3.2 crore, Rs.1.1 crore came from a digitally arrested scientist from Bareilly. On June 20, the whole corpus was withdrawn from the account, which was then frozen.
What does this renting out of a business account mean? Traditionally, mule accounts are operated by individuals – unwitting or complicit. This case opens up a scary proposition that the companies themselves being used as mule accounts for a price. This way of allowing a business account to be misused offers a larger, more legitimate-looking financial funnel to move stolen money. The other misleading dimension of the business account is that it has higher transaction limits, less scrutiny and more credibility, making them ideal laundering channels.
This move takes the concern beyond negligence. It indicates active collusion with the cybercrime syndicates. A commercialised underground ecosystem now exists where cyber crooks “rent” mule accounts for monthly fees, commissions or even contracts. If it happens to be a business account, it can be termed as windfall. A corporate account adds multiple layers of protection for the criminals; multiple signatories and bulk transaction patterns to name a few. Legit invoices or shell documentation to mask fraud proceeds also happen. This makes the law enforcement intervention is slower and more complex, delaying freezing or recovery.
IS IT TIME TO COME UP WITH A CORPORATE-LEVEL ACCOUNTABILITY FRAMEWORK FOR CURRENT BUSINESS ACCOUNTS?
Sanjay Sahay
Have a nice evening.