A massive “digital hawala” network has been unearthed in Jammu and Kashmir, with security agencies freezing more than 8,000 suspected mule bank accounts and placing thousands more under scrutiny. Investigators believe the network forms part of an international cyber fraud and money laundering chain, with possible links to terror financing. Handlers are suspected to be operating from China, Malaysia, Myanmar, Cambodia and Pakistan.
Central agencies have directed J&K Police, banks and other law enforcement bodies to coordinate closely to identify and block newly created mule accounts and trace the middlemen, known as “mulers”, who recruit and manage these networks.
What Are Mule Accounts?
According to SSP Counter-Intelligence Kashmir, Tahir Ashraf Bhati, cyber fraudsters are constantly adopting new methods to move illicit funds, and mule accounts have become a growing concern, particularly in northern India.
Speaking to Zee News, SSP Bhati explained, “Cyber frauds often try to adopt new ways to lure money, and one new method is a mule account, which is mostly active in north India. A mule account works like a mule or a donkey, where an account is used to carry funds from one place to another. Money moves from one account to other then to another. This method is used because when they are investigation they found a layer of accounts.”
Investigative findings reveal that mule accounts are legitimate bank accounts opened in the name of ordinary individuals but later used by criminals as temporary “parking spots” for stolen or illicit funds.
SSP Bhati added, “Mule accounts are used through innocents as well as those who think we have small role and we will be out after getting commission and we can’t be trapped. Initially these accounts are created genuinely then criminals took full control of the account taking all credentials of account giving rent or commissions to the account holder and then these amounts are routed and reaches end user.
Mostly, account holders behave like innocents and say unknown users used the account, but whoever remains in this chain is a criminal because the money is generated from crime.”
How the Network Operates
Money mules are typically recruited online with promises of easy commissions ranging from 5–10 per cent of the transferred amount. Some may be unaware of the full criminal design, while others knowingly participate for profit.
These accounts receive funds from victims of phishing scams, fake investment schemes, bogus shopping websites, romance scams and job frauds. The money is then quickly transferred through multiple accounts to obscure its origin.
In many cases, overseas cyber scammers defraud victims globally through bank transfers, UPI and other digital modes. The stolen funds are routed into Indian mule accounts, mostly located in J&K. From there, the money is transferred into private cryptocurrency wallets, often non-KYC wallets created using VPNs to conceal identity and location.
The cryptocurrency is then cashed out, split or moved further, making it extremely difficult to trace. Authorities have earlier banned VPN usage in Jammu and Kashmir as part of efforts to curb such activities.
Officials say without mule accounts, the entire fraud chain collapses because criminals would lack an easy mechanism to channel stolen funds into the formal banking system and convert them into digital currency.
From Traditional to ‘Digital Hawala’
Security agencies describe this system as “digital hawala”, a modern adaptation of the traditional informal money transfer system. The shift comes after earlier crackdowns, including the National Investigation Agency’s 2017 action against physical hawala networks in the region.
Over time, agencies have identified and frozen more than 8,000 mule accounts across Jammu and Kashmir. These accounts are believed to have acted as the financial backbone of global scam operations.
SSP Bhati confirmed that investigations are ongoing, “Many accounts are on our radar which are suspicious and are under investigation. 7-8 thousand accounts are doubtful and are under scanner, and we are investigating them.
The people who open accounts are of different kinds. One is related to this fraud and with the help of officials open the accounts on fake credentials, another is those who are lured by their greed for commissions, jobs, and other benefits, in some cases, they are also blackmailed.”
International Links and Terror Funding Concerns
A detailed study by central security agencies, based on multiple intelligence inputs, traced recruitment and operational guidance to handlers based in China, Malaysia, Myanmar, Cambodia and Pakistan. These foreign operators allegedly instruct recruits in J&K to open or provide bank accounts for transactions.
Officials fear that part of the laundered funds, or commissions earned by local mules, could be diverted to support terror and separatist activities.
SSP Bhati stated, “We can rule out that the money is not pumped in terrorism, in jk we are committed to eradicate all kinds of crime and financing terrorism is a big crime we are handling since a long time and we try to see all those channels that could finance the terrorism In this mule account crime, it is very important to find out where the money comes from and where it goes and it’s a big challenge there is every possibility that this money is used by anti-national elements to fund various criminals activities which may include the terrorism in this part of country so we are trying to get money originate and where it goes in several states of country it has also international links and at one stage gets converted into digital currency and we can’t rule out terror links in that.”
A National Security Challenge
Authorities view this not merely as cyber fraud but as a serious national security concern, given the region’s history and the potential terror financing angle. The scale, with more than 8,000 accounts frozen, underlines the magnitude of the network.
The investigation now focuses on tracing the origin and final destination of funds, dismantling recruitment channels, and preventing the creation of new mule accounts. Agencies acknowledge that tracking digital currency flows and cross-border handlers poses a significant challenge, but maintain that dismantling this financial pipeline is critical to breaking the wider criminal and potential terror network.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: ZEE News
