Security agencies have identified and frozen more than 8,000 “mule accounts” in Jammu and Kashmir over the past three years, uncovering what officials describe as an evolving system of digital money laundering that investigators believe underpins international scam syndicates and, potentially, activities detrimental to national security.
The Anatomy of a Hidden Network
Security agencies say they have uncovered a rapidly expanding network of so-called “mule accounts” in Jammu and Kashmir that forms a crucial link in the financial architecture of international cybercrime operations.
These accounts, often opened in the names of individuals enticed by the promise of easy commissions, serve as temporary repositories for funds generated through fraud. Investigators describe them as the most vulnerable yet indispensable component in the cybercrime pipeline. Without such accounts, officials say, criminals would struggle to move stolen money into untraceable digital assets, including cryptocurrency.
Over the past three years, more than 8,000 accounts across the region have been identified and frozen, according to officials. The scale of the crackdown has revealed what authorities characterize as an intricate laundering system, structured to obscure financial trails and fragment large sums into smaller transactions to avoid automated monitoring systems.
In several instances, accounts were opened under the names of shell companies, enabling transfers that sometimes reached Rs 40 lakh in a single day without immediately triggering suspicion. Funds were swiftly routed through multiple accounts, further complicating detection.
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Recruitment, Commissions and the “Parking Account” Model
Investigators say the system relies on a steady supply of individuals willing to hand over control of their bank accounts. Many of these account holders are not directly involved in contacting victims or orchestrating scams. Instead, they provide access — including online banking credentials — under the assurance that their accounts will be temporarily used as “parking accounts.”
Officials say recruits are typically persuaded that the arrangement carries minimal risk. In exchange for commissions, they surrender full access to their financial accounts. Once in operation, those accounts become conduits for laundering proceeds from cyber fraud.
A single scam operator, investigators have found, may control between 10 and 30 mule accounts simultaneously. By maintaining this supply chain, intermediaries ensure the smooth movement of money across multiple nodes, fragmenting and dispersing funds before they are converted into other forms.
Security officials stress that even if mule account holders are not the architects of scams, they remain complicit in the laundering process.
“The entire scam ecosystem depends on these accounts,” a senior official was quoted as saying. “Without a destination for the money, the scam fails at the first step.”
Digital Assets and the Turn to Cryptocurrency
Authorities note that many of the accounts ultimately feed into private cryptocurrency wallets, which are often established using Virtual Private Networks (VPNs) to mask digital footprints. Such wallets typically do not require Know Your Customer (KYC) verification, further complicating enforcement efforts.
Regional police have already restricted VPN usage in parts of the valley, citing its utility for terrorists and separatists seeking to avoid detection. Officials say the concern extends beyond financial fraud, warning that commissions earned by mule account holders and intermediaries may be diverted toward activities detrimental to national security.
A comprehensive study by central agencies has indicated that individuals in countries such as China, Malaysia, Myanmar and Cambodia are allegedly directing recruits in the union territory to create private cryptocurrency wallets. Investigators believe this arrangement enables cross-border scam networks to move funds swiftly into digital assets that are more difficult to trace or freeze.
Enforcement Response and the Evolution of “Digital Hawala”
In response to what officials describe as a growing threat, central security agencies have directed the Jammu and Kashmir Police and other enforcement bodies to engage with banks to curb the proliferation of such accounts. Authorities are also working to identify intermediaries — commonly called “mulers” — who manage and recruit mule account holders.
Officials say the model reflects an adaptation by networks that previously relied on traditional channels for moving illicit funds. After the National Investigation Agency launched a crackdown in 2017 on illegal financial flows into the region, authorities believe anti-national networks adjusted their methods.
Instead of conventional routes, investigators suspect they have turned to what officials describe as a “digital hawala” system — one that replaces couriers and cash transfers with online banking credentials, layered transactions and cryptocurrency wallets shielded by anonymizing tools.
While enforcement agencies continue to trace financial trails and freeze suspect accounts, investigators describe the mule account ecosystem as resilient. Its participants may appear peripheral, but officials say their role — quiet and transactional — has become central to the functioning of transnational fraud networks operating in an increasingly digital landscape.
