New Delhi: Fraudsters targeting Indian consumers are increasingly routing stolen money through India-based mule accounts instead of overseas accounts, marking a significant shift in cybercrime tactics as enforcement agencies tighten the noose around scam centres in Southeast Asia, according to BioCatch's Digital Banking Fraud Trends in India 2026 report.

The report says the change has become evident over the past two years, with cybercriminals moving away from using mule accounts in countries such as Myanmar, Cambodia and Laos.

"Previously, mule accounts receiving these transfers were located in other countries across Southeast Asia. Our data now shows a substantial increase in transfers to potential lower-level mule accounts within India."

According to the report, intensified enforcement action led by the United Nations Office on Drugs and Crime (UNODC) has forced scam networks to alter their operations rather than shut down.

"The operating model has become more distributed, supported by wider money-laundering networks, data brokers, malware providers, deepfake and AI-driven services, and other crime-as-a-service facilitators."

The report notes that fraud syndicates are increasingly relying on local cash-out infrastructure in India, including mule accounts, payment rails, mobile devices and SIM cards, to move illicit funds.

BioCatch said most scam operations now depend on recruiting lower-level mule accounts and mule handlers within India. This "mule-as-a-service" network collects stolen money before converting it into cryptocurrency and transferring it to digital wallets linked to scam centres.

The report also highlights the challenge banks face in identifying mule accounts, as they often belong to genuine customers using valid credentials and authorised transactions.

Instead of analysing individual transactions in isolation, BioCatch recommends combining behavioural, session, device and network intelligence to detect suspicious activity more effectively.

The findings come as the Indian government intensifies efforts to tackle cyber fraud.

In May this year, the Indian Cyber Crime Coordination Centre (I4C) under the Ministry of Home Affairs signed a Memorandum of Understanding with the Reserve Bank Innovation Hub (RBIH) to strengthen AI-driven detection of mule accounts through intelligence sharing from the I4C's Suspect Registry.

Speaking at the event, Union Home Minister Amit Shah had said:

"Mule accounts are big hurdles in curbing cybercrimes."

According to a Lok Sabha reply by the Ministry of Home Affairs, the I4C's Suspect Registry had identified and shared details of 27.37 lakh Layer-1 mule accounts with participating institutions as of January 31, 2026, helping prevent fraudulent transactions worth more than ₹9,518 crore.

The report concludes that banks must identify suspicious accounts much earlier to stay ahead of organised cybercrime.

"With mule networks becoming more organised, proactive detection will depend on connecting behavioural, device, and network intelligence in real time."

It adds that early detection of mule activity is critical to preventing fraud before customers lose money.