RBI leverages AI tool to mitigate digital fraud

As part of its commitment to reduce fraud across India, RBI created MuleHunter.ai, with the model utilising data from banks to identify fraud patterns more efficiently. The solution was developed by the Reserve Bank Innovation Hub and is set to be piloted with two public sector financial institutions.

The model comes just a month after RBI made new modifications to Know Your Customer (KYC) guidelines, aiming to augment how financial institutions verify identities. The organisation intended to further increase security across the region and ensure a safe landscape for financial institutions and individuals residing in India. The adjustments to the KYC guidelines focused on optimising how financial institutions conduct identity verification processes on their customers while also delivering simple and convenient procedures.
 

RBI’s focus on decreasing financial fraud levels

Considering that India saw a substantial increase in its levels of fraud, with the National Crime Records Bureau (NCRB) underlining that online financial frauds accounted for nearly 67.8% of cybercrime complaints, the Reserve Bank of India Innovation Hub launched MuleHunter.ai, intending to support banks and financial institutions in detecting and mitigating mule accounts. Compared to traditional systems that tend to provide false alarms, MuleHunter.ai leverages machine learning to accurately identify suspicious accounts by following illicit fund flows. Through this approach, banks are set to be able to detect fraud more effectively, improving the security of India’s financial landscape. From early results, the organisation mentions augmented detection rates, which advance the fight against mitigating financial crime.

Furthermore, MuleHunter.ai was designed after 19 distinct patterns of mule account activity were analysed in partnership with multiple banks. Also, RBI has been leading a hackathon to support advancement in fraud detection. Financial institutions can continue to leverage their systems, however, MuleHunter.ai aims to offer smaller banks the necessary infrastructure to detect fraud and safeguard customers while augmenting trust in the financial ecosystem. At the same time, RBI encouraged banks to team up with its initiative and detect mule accounts, as well as to further advance the capabilities of the service. Representatives commented on the announcement, mentioning that RBI took several measures in collaboration with banks and other stakeholders to decrease financial fraud in the financial sector, including guidelines for regulated entities to scale cybersecurity, cyber fraud prevention, and transaction monitoring.