An AML/fraud team can halt the 'mule train'

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As a pandemic keeps Americans at home, many of the elderly who are most susceptible to COVID-19 find themselves vulnerable to another threat: Criminals who are looking to exploit their increased isolation and financial stress to recruit them into money mule scams. These scams are designed to trick seniors into transferring stolen funds, often leaving victims’ money untraceable and unrecoverable.

In April, the FBI issued a bulletin warning that this crime is on the rise. They also published a Money Mule Awareness Guide to help inform the public. Beyond increased awareness, it’s critical that banks fight money muling by taking steps to protect their customers.

Fortunately, the technology they need is readily available to them. All they need do is take advantage of one of the most significant technology trends supporting the fight against financial crime: the convergence of fraud and compliance infrastructure.

As banks move to integrate fraud detection and anti-money- laundering functions, money mule activity provides an excellent operational starting point. Here’s how fraud detection and AML can work together to pinpoint this rapidly growing crime:

Money muling is often perpetrated by fraud networks, with a money mule “handler” directing the activity of a group of mules. In turn, multiple handlers can be orchestrated by a higher-ranking member of the criminal network.

Banking behaviors typically associated with an individual mule—including higher-than-normal volumes of deposits and transfers—can trigger fraud alerts in a financial institution that has an enterprisewide customer view, i.e., monitoring all inflows, outflows, banking channels and devices down to the customer level. For example, a mule handler may sign into multiple mules’ accounts from a single device, which can be a suspicious activity, alone.

Suspected mules can be grouped into a cohort and compared with each other, and with persons and entities suspected of money laundering, using link analysis software. This technique, also known as social network analysis, can find otherwise imperceptible connections between mules, mule handlers and other members of a fraud network, giving financial institutions information-rich intelligence to move forward with in their investigations.

With elder fraud scams growing at an alarming rate, it’s important for banks to start working today to improve their money muling detection capabilities — and the rich data that can be found by combining fraud and AML operations provides an easily accessible place to start.

The sooner financial institutions take advantage of the data at their fingertips, the better — it will only become more necessary in a post-pandemic world of mobile deposits, contactless payments, person-to-person payments and ongoing economic stress.

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