Jammu and Kashmir: Hub for Digital Hawala Network with Over 8000 Mule Accounts Detected
Jammu and Kashmir Becomes Hub for Expanding Digital Money Laundering Network
Security agencies have uncovered a vast network of “mule accounts” in Jammu and Kashmir, which has become a crucial link in the financial infrastructure of international cybercrime operations.
A Complex System of Digital Money Laundering
Over 8,000 such accounts have been identified and frozen in the region over the past three years, revealing a complex system of digital money laundering that underpins international scam syndicates and potentially threatens national security.
The network relies on a steady supply of individuals willing to hand over control of their bank accounts, often in exchange for commissions. These account holders, who are not directly involved in scamming victims, provide access to their online banking credentials, allowing their accounts to be used as temporary repositories for funds generated through fraud.
Conduits for Laundering Proceeds
Once in operation, these accounts become conduits for laundering proceeds from cybercrime. A single scam operator may control multiple mule accounts simultaneously, using them to fragment and disperse 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.
Digital Assets and Cryptocurrency Wallets
The system has evolved to incorporate digital assets, with many accounts ultimately feeding into private cryptocurrency wallets established using Virtual Private Networks (VPNs) to mask digital footprints.
These wallets often do not require Know Your Customer (KYC) verification, making enforcement efforts more challenging.
Regional Response and International Connections
Regional police have restricted VPN usage in parts of the valley, citing its utility for terrorists and separatists seeking to avoid detection.
Officials warn 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.
This arrangement enables cross-border scam networks to move funds swiftly into digital assets that are more difficult to trace or freeze.
Enforcement Efforts
In response to the 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 working to identify intermediaries who manage and recruit mule account holders.
A Resilient Ecosystem
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, turning to a “digital hawala” system 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 has become central to the functioning of transnational fraud networks operating in an increasingly digital landscape.
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