Money Mule Fraud “ What is it & how to prevent it?

"As the rise in money mules demonstrates, many young people seem unaware of the risks they’re running and the consequences it can have not only for the individual concerned but for society as a whole. More needs to be done to raise awareness about the harm of fraud and financial crime.

We’re calling on banks in particular to ensure that they are providing young people with the necessary knowledge to prevent them falling victim to fraud – or becoming fraud perpetrators."

Chief Executive Officer of Cifas, Mike Haley

"It is not a problem we are going to arrest our way out of.

We don't want to give a whole young generation convictions when maybe they're at the start of their life and they've actually made a mistake. What we actually want to do is give them the knowledge, the skills and the powers to stop them making those decisions in the first place."

Detective Chief Inspector Gary Miles, Metropolitan Police Fraud and Linked Crime Online Unit

“Finance organisations are now faced with having to look more carefully than ever at application fraud stage, in order to prevent fraudsters opening accounts for the purpose of receiving funds obtained from victims. There is definite correlation between mule recruitment, accounts opened by first party fraudsters for the purpose of receiving fraudulently moved funds and facility takeover and push payments and which can be missed by fraud practitioners within organisations. This is often because the two ends of the frauds happen in two or more organisations (or even if within the same organisation the two ends of the fraud can be dealt with by different fraud areas). Synectics Solutions Workshop, September 2018

Sentencing of 26-year old money mule from Enfield serves as stark warning

June 6, 2018

A young man from Enfield who allowed his account to be used by fraudsters to transfer funds has was sentenced today at Inner London Crown Court, and received a 12 month community order and 280 hours of unpaid work.

The defendant’s phone revealed exchanges of text messages with the fraudsters, giving up use of his accounts, cards and online banking in exchange for a cut.

Addressing The Problem

At the moment, there is no ‘silver bullet’ solution to stop money mules who are the recipients of push payment scams.

Various programmes designed to educate young people and parents about money muling are reaching out to the public. Cifas, in partnership with Financial Fraud Action UK, part of UK Finance, for instance, have led a hard hitting multi-media campaign which clearly spells out the dangers and implications of becoming involved. But there is so much more to be done.

The regulators have cited collaboration and data sharing as key factors in mitigating the risk. Many bodies, from financial crime solution companies like Synectics Solutions to banks and trade groups, are working together to try to formulate better systems to combat the problem, including transactional controls and flagging up potential and actual victims - whilst providing an efficient real-time ‘on boarding’ service to genuine customers.

Achieving this will take a holistic approach, looking at both the application process and account lifecycle and offering a multi-layered set of provisions and solutions.

Synectics Solutions is well equipped to support the industry in meeting these challenges, hosting an established syndicated intelligence database of in excess of 250 million records across multiple sectors and with access to a variety of other public and private data sources.

In harnessing this data, our established SIRA and Precision services have a key role to play in the future of the fight against money mules and APP scams.

• SIRA is an all-in-one established financial crime prevention solution which leverages millions of data items from different sectors to identify and stop fraudsters working across industries, enabling providers to make quick and informed decisions. It works using a multitude of machine learning algorithms and comprehensive workflow management enabling point of application identification of fraud cases, whether these be identity frauds or money mules – key fraud types in the proliferation of APP fraud. In the first half of 2018 just over three quarters of all fraud identified within our syndicated database were either identity fraud or misuse of account (driven mainly by mule activity), the data related to which is available to match to as part of the syndicated intelligence pot.

• Precision, our predictive analytics solution, has the ability to process huge volumes of data and apply a combined array of algorithms and modelling techniques. It provides a predictive modelling platform capable of analysing the largest of data sets and producing actionable results in real-time. Increasingly it is being used to target specific types of financial crime activity.

These solutions may prove to be particularly helpful in:

• Profiling what a potential victim of scamming might look like, taking in factors like demographics, age, income, location and occupation.

• Identifying bank accounts applied for by first party and third party fraudsters where the account if opened has a high risk of being used for mule activity, namely being used to receive funds as a result of fraudulent activity elsewhere, account takeover or APP.

However, we appreciate this is only part of the solution.

We are also taking an active role in collaborating with customers and the industry to move the fight against APP fraud and money mules forward. We are co-ordinating shared knowledge through workshops and feedback from our clients – financial institutions which are in the ‘front line’.

We’re also tracking the voluntary Contingent Reimbursement Model Code currently being applied by many banks to compensate victims of APP fraud – and we will consult with our members when this code is ratified.

Whilst there is currently a lot of industry focus in this area there is also some uncertainty on how best to combat it and the full implications of the PSR guidelines.

What is certain is that financial institutions which fail to take up a positive and proactive position are leaving themselves open to potential damage, financially and reputationally.

Authorised Push Payment fraud

One area of fraud which money mules and many other victims become unwittingly involved in is Authorised Push Payment scams – where payments are when fraudsters deceive consumers or individuals at a business to send them a payment under false pretences to a bank account controlled by the fraudster.

To find out more, please download our white paper ‘Addressing the problem of APP fraud’ at www.synectics-solutions.com

To discuss the implications of money mules and how you might participate in the collaborative approach to combating them, please call 03332 343 418 or email info@synectics-solutions.com.