Everything You Need to Know About [Money] Mules & How to Detect Them- Hint: It’s Not a Sniff Test
September 17, 2020
It’s no surprise that targeted fraud is an ongoing problem for many businesses. According to a JP Morgan report, 81% of businesses were targets of some form of payment fraud in 2019. One of the many — and damaging — ways that fraudsters take advantage of businesses is through utilizing money- also known as credit or money mules.
Whereas drug mules illegally transport drugs across borders on behalf of others, money mules do the same but with money. This is typically done by using a mule’s own bank account or by opening multiple accounts and wiring or transferring the money to a designated third-party account. Whether they know it or not, mules usually transfer stolen money made from or for use in drug trafficking, human trafficking, terrorism or as part of a larger-scale money laundering scheme.
Why Are We Seeing More of This?
According to an Aite Group report on muling, “The adoption of faster payments, the global increase in identity-related fraud, and a relative lack of consistency within and across markets in how FIs monitor, remediate, and proactively interdict mule activity are creating ideal conditions for increased mule activity.”
Fraudsters are adept at targeting people in vulnerable positions. People of all ages, especially young people, are lured through online job postings, romance schemes, prizes, good-Samaritan schemes and on social media.
The Different Types of Money Mules
The FBI has determined that there are primarily 3 types of money mules: unknowing, witting and complicit.
The Benefits for Fraudsters
Mules allow for a degree of separation between the fraudsters and the actual transferring of the money. Fraudsters are more likely to get away scot-free compared to the mules that are apprehended. What many mules do not realize is that if (and when) they are caught, even if unknowingly part of the scheme, they will most likely suffer legal and/or criminal ramifications, have their good credit destroyed, and be required to repay the damages if the fraudsters are at large.
Detecting Mules When Onboarding
Criminal mule rings are clever, however, there are clues that can be used to detect those vectors of attack. There are key elements to look for when identifying fraudulent user behavior and muling within your ecosystem:
- Are stolen identities being used?
- Is one account managing multiple accounts (anomalous identities)?
- Are there any links to suspicious users?
- Is user behavior consistent over time (geolocation, age, activities, etc.)?
- Are they hiding their IP geolocation?
- Are there outlier sources in incoming or outgoing funds?
Technology such as document verification, liveness tests, biometrics matching and device fingerprinting are just some of the tools that should be used within a business’s control framework for monitoring. User profiling is essential, and as you improve your monitoring, you will be able to better inform and apply those findings in your onboarding process to combat mules and money laundering.
Through patented and advanced AI technology, Acuant Compliance allows you to meet anti-money laundering regulations, monitor transactions, manage fraud, and fight fraud all in one comprehensive and customizable platform.