10 Districts Raise Mule-Account Alarm, Here's What Did V-KYC Checks Uncover?

New Delhi - A recent analysis of video know-your-customer (V-KYC) data by fraud prevention firm IDfy has raised concerns about the potential for fraud networks in certain districts. The study identified 10 districts, primarily in Uttar Pradesh, Haryana, and Rajasthan, as areas of heightened risk for mule accounts - accounts used to receive and transfer illicit funds. The districts flagged were Lakhimpur Kheri, Bareilly, Varanasi, Saharanpur, Muzaffarnagar, Panipat, Firozabad, Jodhpur, Lucknow, and Ghaziabad.

The V-KYC data showed varying rejection rates among these districts, with Lakhimpur Kheri leading at 14.03 percent, followed by Bareilly at 13.37 percent, and Varanasi at 12.32 percent. While a high rejection rate is a risk indicator, it does not confirm that every applicant or account in a district is fraudulent. V-KYC rejection may occur due to impersonation, altered documents, prompting by another person, or suspicious behavior.

IDfy's analysis suggests that some flagged locations may already be established hotspots, while others could be developing into clusters. Importantly, early warning signs of district-level fraud hotspots appeared in V-KYC signals up to two months before public reporting or law-enforcement action. The findings underscore the importance of using onboarding patterns alongside transaction monitoring and other checks to identify emerging clusters sooner, allowing banks and customers to take preemptive action.