Money mules: The reins tighten on those trying to hide fraudulent funds
Major lenders have deployed new tech to identify and close money mule accounts suspected of being used to deposit fraudulent funds.
The Experian Mule Score service has been adopted by banking giants that can use the tech to analyse account data and flag any suspicious activity contributing to the scourge of fraud in the economy.
Money mules are individuals who have agreed to let their bank accounts be used by criminals in exchange for cash.
According to Experian, 42% of first-party current account fraud is mule-related, where a person knowingly misrepresents their identity or gives false information for financial gain.
And this number has risen 13% in the first three months of the year alone.
Overall, money laundering is estimated to cost the UK economy more than £100bn each year, with money transfer Authorised Push Payment (APP) fraud losses reaching £485m in 2022.
Funds deposited into money mule accounts are often the proceeds from APP fraud with the cash typically moved between two and three others before making their way to fraudster’s accounts, international accounts and in some cases, crypto wallets. The cash is then reintegrated back into the UK financial system.
Experian revealed that accounts used in money mule activity tend to be newly-opened, but the holder will have a number of older accounts that can continue to be used to transfer funds if the newer one is closed.
Currently banks and other account providers don’t have information on where the money is being received from or being sent to except for confirmation of the payee, making it difficult for them to identify and investigate accounts potentially being used in this way.
A solution to money mules
However, Experian Mule Score allows banks to assess their entire portfolio and analyse account opening history and turnover activity so they can easily spot questionable activity.
“The solution will help banks avoid onboarding suspicious accounts at the point of opening, reduce fraud losses and operational costs, support consumers who are at risk, as well as preventing fraudulent funds entering the mainstream financial system,” Experian said.
However, it wouldn’t disclose to YourMoney.com which lenders have adopted the technology.
Eduardo Castro, managing director, identity and fraud, Experian UK&I, added: “The level of fraud and financial crime in the UK represents a threat to financial institutions and their customers. Experian, thanks to our data, analytics and technology, is uniquely placed to help. We are committed to helping eliminate financial crime and ensuring safe financial access for all.
“Mule Score is the first solution of its kind, giving financial companies a comprehensive view of account activity, helping prevent them from onboarding potential mule accounts and detect already opened accounts which are suspicious.”
In 2021, Experian’s fraud prevention technology blocked more than £1.8bn of fraudulent transactions.