One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: Taking commission to route other people's money through your own bank account can get you treated as a money mule account holder, even if you never touched the fraud yourself. Genuine ignorance is a defence, but once the trail passes through your account, the burden of proving that ignorance usually shifts to you. A frozen account can be freed and a clean account holder can walk away, but it takes a lawyer who handles these matters regularly to make that happen at any reasonable speed.
Karan Deshmukh was three months away from finishing his engineering degree in Pune when his hostel roommate, Rohan Iyer, showed him the group chat. The pitch was simple. Orders came in as Buy, Sell or Recharge tasks. Rohan used a separate bank account, opened on the admin's advice, to receive and send payments, and a small commission landed after each completed order. He had been told, in those words, that using his main account would get it flagged. By early March 2025 Karan had opened a second account of his own and run a handful of orders. It looked like trading. It paid, which is exactly why it looked legitimate.
Then the account stopped working. A lien had been marked against it by a cyber cell in another state, where a complaint about an investment fraud mentioned a transfer into an account number matching his. A local lawyer filed a representation. Six weeks passed and nothing moved. Karan then approached the Chamber of Advocate Sudhir Rao. The office pulled the transaction statement, matched the credited amount to the complaint, wrote to the investigating officer with KYC records and order screenshots, and moved the jurisdictional magistrate. The lien was lifted and the account released. No chargesheet followed. Advocate Sudhir Rao's experience in cyber crime and money-laundering matters is what secured that order; the first attempt, made without that background, had produced nothing at all.
Key Facts of the Case
- The client had completed only a handful of commission orders and had stopped before the freeze.
- He was never named as an accused; the only link was a single transfer landing in his account.
- The account was frozen by a cyber cell in a different state, on a complaint filed by an unrelated fraud victim.
- He had no knowledge of the source of the funds and no contact with the complainants.
- The platform had specifically told participants to use a "separate account" so the main one would not be flagged, which is a classic mule recruitment instruction.
- The first representation, filed without cyber crime or PMLA experience, sat unattended for weeks.
- Relief came from a documented representation to the investigating officer plus an application before the jurisdictional magistrate.
- No chargesheet was filed against the client once the transaction history and order records were produced.
The Direct Legal Answer
Here is the short version before the detail.
Is receiving orders and moving money enough to be called a money mule account holder?
Moving money alone is not a crime. But the pattern matters far more than the label. A task-based platform that asks you to use a separate account, pays a commission per transfer, and does not give you a genuine trading counterparty is the standard recruitment model for mule accounts. Investigators read the pattern, not your intentions.
What if the account holder genuinely did not know where the money came from?
Lack of knowledge is a real defence to cheating under Section 318 BNS, because that offence needs dishonest intention. But under PMLA the burden of proving that the property is not proceeds of crime sits on the person holding it, which changes the practical picture a lot.
How does a frozen account actually get unfrozen?
Not by waiting. You file a representation with the investigating officer, attach the transaction trail and KYC, and if that fails, move the jurisdictional magistrate for release of the lien.
What are the red flags that separate P2P trading from mule work?
Commission paid per transfer rather than on price movement, instructions to keep it off your main account, no verifiable exchange counterparty, and pressure to recruit others.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Stop all activity the moment a lien appears. Every fresh transfer after that point is evidence of continued involvement, and it will be used.
Preserve everything: order screenshots, chat logs, the referral that brought you in, and the full bank statement. Memory is not evidence in a cyber crime file.
This category of matter involves procedural and evidentiary nuances that a general practitioner may not be fully familiar with, particularly around PMLA attachment and lien release. Engaging an advocate who regularly handles such matters usually leads to faster and better outcomes.
Applicable Sections of Law
- Section 318(4) BNS — cheating and dishonestly inducing delivery of property, the provision most often invoked against mule account holders.
- Section 319 BNS — cheating by personation.
- Section 61(2) BNS — criminal conspiracy, where the person knew the group's purpose.
- Sections 66C and 66D, Information Technology Act, 2000 — identity theft and cheating by personation using a computer resource.
- Sections 3 and 4, PMLA, 2002 — the offence of money-laundering and its punishment, read with Section 24, which places the burden of proof on the person holding the property.
- Section 173 BNSS — recording of information in cognizable cases.
Punishment and Penalties
Cheating under Section 318(4) BNS carries imprisonment up to seven years and fine. Cheating by personation under Section 319 BNS carries up to three years, or fine, or both. Criminal conspiracy under Section 61(2) BNS attracts the same punishment as the offence conspired to be committed.
Under the IT Act, Section 66C and Section 66D each carry imprisonment up to three years and a fine up to one lakh rupees. Under PMLA Section 4, the punishment runs from three to seven years of rigorous imprisonment with fine.
All of these are cognizable and non-bailable. PMLA offences cannot be compounded; cheating under Section 318(4) BNS can be compounded with the court's permission.
Jurisdiction — Where to File the Case
Criminal cases are tried where the offence was committed. Under Section 184 BNSS, the ordinary place of inquiry and trial is the court within whose local jurisdiction the offence took place. In mule cases that is usually the police station where the defrauded complainant lives, which is often in a completely different state from the account holder.
Complaints under the IT Act are investigated by the cyber crime cell of the local police. PMLA proceedings go before the Special Court designated under Section 43 of the PMLA.
Jurisdiction matters because your home police station will often refuse to act on a lien marked by an out-of-state cyber cell. Knowing which forum to move is half the work.
What if Police Refuse to File FIR?
- Send the substance of your information in writing to the Superintendent of Police under Section 173(4) BNSS if the station officer refuses to record it.
- If that produces nothing, file a private complaint before the jurisdictional Magistrate under Section 175(3) BNSS, seeking a direction to investigate.
- Move the High Court under Article 226 as a last resort, where the refusal is clearly unjustified and no other remedy has worked.
- Keep proof of every refusal: the date you went, who you met, and the written acknowledgement, if any.
Rights of the Accused
- Protection against self-incrimination under Article 20(3) of the Constitution, which includes the right to stay silent.
- Right to be informed of the grounds of arrest and to consult a lawyer of choice under Article 22.
- Right to be produced before a Magistrate within twenty-four hours of arrest, without exception.
- Right to a copy of the FIR and, on request, the grounds of arrest.
- The safeguards laid down in D.K. Basu v. State of West Bengal (1997) on arrest and custody, which continue to bind police.
- Guidelines in Arnesh Kumar v. State of Bihar (2014), which restrict automatic arrest in offences punishable up to seven years.
Bail Provisions
Offences under Section 318(4) BNS, the IT Act and the PMLA are non-bailable, so a bail application is argued rather than granted as of right.
- Where the offence is bailable, bail is a matter of right under Section 480 BNSS.
- Anticipatory bail can be sought under Section 482 BNSS before any arrest happens.
- Regular bail before the Magistrate under Section 481 BNSS, and if the Magistrate refuses, before the Sessions Court or the High Court under Section 483 BNSS.
- In PMLA matters, bail is governed by Section 45 of the Act, which sets twin conditions: the court must be satisfied that there are reasonable grounds to believe the person is not guilty, and that he will not commit an offence while on bail. That is a higher bar than ordinary bail, and it is argued, not assumed.
- Whether anticipatory bail lies at all in a PMLA case is contested, and High Courts have taken different views. On any given set of facts, that is a question to be checked for the particular court before anything is filed.
- Section 35 BNSS requires a notice of appearance before arrest in offences punishable up to seven years, and the person must comply with the notice. Non-compliance is what usually converts a notice into a warrant.
Documents to Keep Ready
- Bank statement for the frozen account, from the date it was opened to the date of the freeze.
- KYC records — account opening form, PAN, Aadhaar, and the photograph on file.
- Screenshots of the platform: the order pages, the commission credited, the group chat, and the instruction to use a separate account.
- Whatever brought you in — the referral, the message, the person who added you to the group.
- The freeze or lien intimation from the bank, in writing, with the date and the police unit named in it.
- Any notice, summons or communication received from a police station or cyber cell.
Carry originals when asked and keep a scanned set for yourself. In these matters, the file is the argument.
Frequently Asked Questions
Can my account be unfrozen if I never knew the money was fraudulent?
Yes, and that is the usual route. A lien is a temporary hold, not a finding of guilt. If the trail shows a one-off credit and no continuing role, a representation to the investigating officer with the KYC and order records often clears it. Where the officer does not act, the jurisdictional magistrate can be moved. Being described as a money mule account holder in someone else's complaint decides nothing by itself.
Will I be arrested for receiving money from a fraud?
A single credit into your account, with no recruitment, no per-transfer commission and no repeat transfers, is a thin case for arrest. Add a commission arrangement, an account opened on someone's instruction, or pressure to bring in others, and it thickens quickly. Section 318(4) BNS is punishable up to seven years and is non-bailable, but the directions in Arnesh Kumar, now largely reflected in Section 35 BNSS, discourage automatic arrest in that range.
How long does removal of a lien take?
There is no fixed clock, and anyone who gives you a date is guessing. I have seen a clean single-credit file cleared in a few weeks, and I have seen accounts sit for months because the same number appears in complaints from three different states. Each lien has to be cleared where it was marked. If more than one cyber cell has flagged the account, expect to deal with each separately.
The bank says it can do nothing until the cyber cell writes to it. Is that correct?
In most cases, yes. The branch is holding the money on an instruction from an investigating agency and has no independent power to release it. The pressure has to be applied at the police or court end, not at the counter.
Can the bank close my account permanently?
Some banks do exit a customer whose account has featured in a fraud trail, usually after a notice. Others just mark the account dormant and leave the lien in place. Either way, be accurate with your next bank about the earlier freeze. The record is already in the banking system, and a wrong answer is worse than an honest one.
What if I was added to the group but never ran a single order?
Then on those facts there may be nothing to answer, provided no money ever moved through your account. Being a member of a chat group is not an offence on its own. Check the statement for any credit you did not expect. If there is none, keep the screenshots and deal with any notice that actually arrives.
Do I need a lawyer if the amount is small?
The lien freezes the whole account, not the disputed sum, so your salary and savings go with it. And the same account number can attract fresh complaints as other victims file. Leaving it alone for six months does not shorten anything.
Should I simply return the money to the complainant?
Not on your own, and not quietly. A direct payment outside the record, made without the investigating officer knowing, can later be read as an admission or as an attempt to influence the case. If return is the right answer, it goes through the proper channel with paperwork behind it.
What to Send, and Where
Write in before you argue with the branch manager again. Send three things:
- The bank statement for the frozen account, from opening to freeze.
- The freeze or lien communication from the bank, with its date and the police unit named in it.
- Two lines from you, in your own words: when the account was opened, what the group asked you to do, and whether any commission ever reached you.
Attach the order screenshots and chats if you still have them. If you do not, say that on day one. It is better to build the representation around what exists than around what has been deleted.
And the honest limit: if the trail shows you knowingly ran transfers for a cut, no drafting turns that into innocence. What can still be worked on is keeping bail within reach, narrowing what you are alleged to have handled, and separating the disputed credit from the rest of the account. Where there is nothing to argue, that is the answer you will get.
Reach the chamber through the contact page or book a consultation. Send the freeze order first. The story can follow.
This is general information about Indian law, not legal advice on your own situation. Every case turns on its own facts and documents; please have your papers read before relying on anything here.
Advocate Sudhir Rao, Supreme Court of India
Facing a similar matter? Speak to a Delhi criminal defence lawyer — Advocate Sudhir Rao appears in bail, trial and appellate matters before the Delhi District Courts, the Delhi High Court and the Supreme Court of India.