$36.6 Million Loss: Are Money Mules at Helm of the Payment Fraud?

Crime typologies are shifting. Today, Fraudsters have a global reach and an easy access to vast data collected as a result of data breaches. This makes the problem pertaining to the security of consumers’ personal information never-ending. As we progress to 2018, fraudsters discover new ways to contaminate the space for more money providing an ideal scenario for money mules, a valuable part of the cybercrime ecosystem.

Gullible Individuals Lured to Launder Proceeds of Serious Crime


Money mules act as money laundering intermediaries for illegitimate transfer of funds between bank accounts. According to a recent study, approximately 1,719 money mule transactions were recorded in 2017. In these transactions, more than 90% were linked to cyber crime incorporating phishing, card fraud, holiday fraud and CEO fraud.
Recruitment of money mules is unwittingly done via fictitious companies that appear legitimate or through spam email advertisements. Their accounts are then wired to the fraudsters’ account in which money transfer takes place in various ways such as cash deposits in ATMs, transfers from other accounts or potentially with the help of an insider. Once funds are received, money mules are instructed to deplete the accounts in such a way that will not raise suspicion.


A Stubborn Problem for the Banking Sector

Mule scams include illegal activities such as check forgery, re-embossing, tax refund fraud and wire fraud. Money mules also add to money laundering making it the world’s largest industry in terms of turnover. Majority of the money mule cases are linked with fraud like:
ACH: The accounts of money mules are employed to obtain fraudulent ACH or wire payments and the money is paid to the fraudsters.
Sleeper Fraud: The emerging sleeper fraud is becoming a critical problem for the banking sector. Termed as silent killer, it includes stockpiling of money mule accounts that are used later in a fraud scheme.
Social Media Imposter: Social media imposter is a type of money mule fraud in which fraudsters create fake social media accounts of your company.
Human trafficking: Money mules also perpetuate other fraudulent activities beyond money laundering, as the stolen money is also used for funding other forms of organized crime like human trafficking and drug dealing.

Money Mule Scams: What Should Be Your Line of Defense

As the deployment of money mules continue to spread, the banking sector needs to be more diligent. There are plenty of active accounts for transactions leading to various mule scams. Developing a holistic monitoring of all transactions in real time is the best strategy for preventing money mule scams.
Organizations must introduce advanced fraud detection and prevention solutions to curb down the threat rate. Approaches like Know Your Customer (KYC) and enhanced due diligence allow organizations to effectively implement compliance. Machine learning combined with domain expertise will help businesses identify suspicious transactions to prevent money laundering and Card fraud.

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