MALAYSIA is seeing a steady rise in mule account cases, mirroring the broader escalation of online financial scams. The issue cuts across demographics and is becoming a systemic threat to banking integrity and public trust.
Mule accounts are bank accounts used to receive and transfer illicit funds on behalf of fraud syndicates, obscuring the origin and destination of money. These account holders — some knowingly complicit, others misled through job scams or financial incentives — act as intermediaries in online fraud, investment scams and phishing schemes.
Law enforcement agencies globally, including Europol and Interpol, have identified mule accounts as key enablers of cross-border cybercrime. Young adults and gig workers are frequently targeted due to economic vulnerability and high online exposure.
In Malaysia, the problem has intensified with rising digital banking adoption and the adaptability of criminal networks. At least 1,300 individuals suspected of online fraud were arrested during
Operation Mule, conducted by the National Scam Response Centre (NSRC) over a one-week period ending Sept 28, according to media reports.
The surge has left many victims in prolonged disputes with banks, often facing frozen accounts, limited access to funds and lengthy investigations that affect daily life.
Right Step with AMLA?
Last month, Bank Negara Malaysia (BNM) directed banks to issue written explanations when accounts are frozen or closed under the Anti-
Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), and to provide clear appeal pathways and timelines.
The directive aims to standardise how institutions manage suspected mule accounts and improve transparency while safeguarding ongoing investigations.
The Federation of Malaysian Consumers Associations (FOMCA) believes the move increases trans- parency and gives consumers a fairer chance to understand and respond.
FOMCA CEO Dr SaravananThambirajah said the directive is a significant and much-needed step forward but noted that it is not sufficient.
Key gaps remain, particularly the lack of standardised timelines, independent oversight and provisions allowing limited access to essential funds.
Without these safeguards, he said, written explanations risk becoming a mere formality.
He added that independent mediation and consumer support channels such as the Financial Mediation and Ombudsman.
Scheme (FMOS) and BNM Link should play a stronger role in ensuring fairness, accountability and timely redress. BNM Link is the central bank’s public service centre for inquiries, complaints and advice regarding the financial sector.
Another issue faced is that banks often provide only broad reasons such as “suspicious transaction activity” or “possible involvement in mule operations,” leaving consumers unclear on the nature of the allegations.
Saravanan recommended a standardised timeframe for resolving appeals and releasing funds once account holders are cleared — acknowledgement within a few working days and full resolution within 30 to 45 days.
He stressed the human impact: Many account holders caught in investigations are young adults, job seekers or individuals misled into facilitating transactions. Blanket enforcement without differentiating deliberate offenders from unknowing consumers risks punishing victims rather than targeting organised syndicates.
Educational campaigns, coupled with transparent appeals mechanisms, are critical to protecting vulnerable account holders while maintaining financial system integrity.
Understanding Mule Account Culpability
Universiti Sains Malaysia (USM) criminologist Dr P Sundramoorthy said the rise of mule accounts is driven by organised syndicates, economic pressures on youth and gig workers and gaps in public awareness.
He explained that syndicates operate such as structured enterprises, using recruitment scripts, layered money trails and digital concealment techniques, while financial vulnerability supplies a steady stream of recruits.
Mule account holders fall along a spectrum of culpability. At one end are those who knowingly rent or sell their accounts for financial gain; at the other are unaware individuals who believe they are performing legitimate transactions and in between are those partially aware who rationalise their participation as harmless. This grey area complicates enforcement as authorities must weigh intent, coercion and ignorance.
He noted that mule accounts rarely operate in isolation, forming part of transnational networks connecting call centres, phishing operations and cryptocurrency laundering.
“Mule accounts serve as the human firewalls of the digital underworld, where disposable, low-risk intermediaries protect high-value criminals,” he told The Malaysian Reserve (TMR).
The Human Cost of AMLA Enforcement
Data collected by FOMCA shows how prolonged account freezes and limited transparency affect ordinary Malaysians.
In many reported cases, consumers wait one to three months before their accounts are reinstated or cleared. Some cases extend beyond 90 days, especially when multiple agencies are involved or when banks fail to provide updates.
Typical situations involve young adults or job seekers who unknowingly share banking details for supposed part-time work or online investment offers. Others allow friends or online acquaintances to temporarily use their accounts, unaware of the mule activity.
One case involved a university student whose bank account was frozen in 2018 after unknowingly becoming involved in a WhatsApp-based scam syndicate. Although he paid RM2,000 court fine and submitted the required documents, the bank refused to reinstate his account. He remains unable to open a bank account in Malaysia due to internal blacklists, losing job opportunities and facing ongoing financial insecurity.
Saravanan said the hardest part for consumers is the lack of access to essential funds — salaries, savings or e-Wallet transfers — affecting rent, food and daily expenses.
Many also experience emotional stress, struggling to explain to employers or family why their accounts are blocked. He warned that most banks still treat all flagged accounts uniformly under AMLA provisions, without clear differentiation between deliberate and unintentional involvement.
Key safeguards still missing include standardised investigation timelines, temporary access to essential funds for verified legitimate consumers and independent review channels beyond internal bank decisions.
Systemic Challenges for Mule Account Victims
The Malaysian Muslim Consumers Association (PPIM) highlighted the difficulties faced by individuals caught in mule account cases, noting that many are repeatedly dragged through legal proceedings despite being unaware of the fraudulent use of their accounts.
Each time a victim lodges a police report, it triggers consequences for the implicated mule. If multiple victims report the same individual at different police stations, that person may face multiple court appearances even if the alleged offence involved only one ATM card transaction.
PPIM estimates that 80% of affected account holders believed they were dealing with legitimate money lenders, while 15% were misled by job offers that did not exist.
Most sought small loans between RM1,000 and RM5,000 and, once discovered, were pressured to admit offences under Sections 420, 422 and 424 of the Penal Code. Those who refused often had to pay bail, hire a lawyer and attend multiple court hearings.
Bank accounts are typically blocked until every case is resolved and police clearance is obtained — a process that can take years. Legal aid is largely unavailable before formal charges, leaving many vulnerable individuals to bear the consequences while scammers remain free.
Regulatory, Enforcement Efforts
The central bank has emphasised a coordinated approach to detecting and disrupting mule account activity, supported by the National Fraud Portal (NFP) developed with PayNet and financial institutions.
BNM governor Datuk Seri Abdul Rasheed Ghaffour said the NFP’s real-time dataintegration and screening capabilities have strengthened banks’ ability to flag and intercept illicit transfers
Between January and June 2025, RM369 million in fraudulent transactions were blocked, putting the system on track to exceed the RM399 million prevented in 2024.
Parallel enforcement efforts have been carried out through the NSRC, which operates round the clock to trace and freeze suspect funds. As at the third quarter of 2025 (3Q25), NSRC has handled 263,683 reports, seized RM12.91 million in scam proceeds and returned RM1.99 million to victims.
“As fraud schemes become increasingly sophisticated, empowering consumers with knowledge becomes pertinent. In 95% of scams in Malaysia, victims knowingly transfer money to people who turn out to be scammers. This demonstrates a critical gap in awareness and emphasises the importance of consumer education,” he said at the 15th International Conference on Financial Crime and Terrorism Financing in Kuala Lumpur (KL).
Police enforcement has also intensified. The Commercial Crime Investigation Department (CCID) arrested 2,123 individuals in September across coordinated operations targeting scam and mule account syndicates.
Under Operation Mule, arrests were concentrated in Sarawak (272), Sabah (200), Kuala Lumpur (137) and Selangor (115). The operation led to 778 investigation papers, with 270 cases already charged in court.
In a parallel sweep, Ops Merpati Khas (held on Sept 2-12) saw 820 arrests, including individuals linked to e-commerce scams and suspected call centre operators. Losses tied to these cases totalled RM11.6 million, with 275 cases charged to date.
What Additional Measures are Needed?
Despite increased enforcement by agencies including the NSRC, Sundramoorthy said measures remain largely reactive.
Syndicates adapt quickly and penalties alone do not address the social and economic vulnerabilities that enable recruitment. Prevention must tackle these root causes, combining public education, stronger banking safeguards, cross-sector intelligence sharing and economic interventions to reduce susceptibility.
Authorities are taking steps to curb mule accounts, but the question remains: Are these efforts enough? The answer is no. More must be done — not just to prosecute perpetrators swiftly, but to ensure independent oversight, clear timelines and transparency for victims caught in the system.
Mule accounts expose deeper structural weaknesses — economic hardship, social vulnerability and gaps in digital literacy. Addressing these issues through education, safeguards and coordinated enforcement is essential.
Ultimately, the fight against mule accounts is more than a crackdown on financial crime — it is a test of society’s commitment to protecting its most vulnerable citizens while upholding justice.