Fraud in the UK has become a significant concern, with 40% of crimes being fraudulent. Money muling is at the forefront, where fraudsters utilise synthetic or real mule accounts for financial gain. The UK government, recognizing the seriousness, plans to publish an action plan to combat this issue.
Resistant AI, a RegTech company helping to fight against fraud and financial crime, has delved into how firms can prevent mulling activity.
Money mules are pivotal in digital fraud, moving and laundering illicit funds. Synthetic mules use stolen identities, while real mules might be unaware participants. The UK’s Economic Crime Plan 2 has identified these networks as a major threat, involving even children in criminal activities.
The FCA’s 2023 report, ‘Proceeds of Fraud – Detecting and Preventing Money Mules’, responds to the escalating fraud issue. It praises some UK firms for their practices but notes many need to improve their fraud detection and prevention controls. This follows significant activities in 2023, including a CEO letter to payment firms and new fraud reimbursement requirements.
The FCA report highlights technology, especially machine learning, in fighting muling. These systems are adaptable and precise in detecting complex fraud. They are beneficial for all businesses, but firms must ensure transparency and accountability in their use.
The FCA suggests strengthening onboarding controls, improving transaction monitoring, and optimizing reporting mechanisms. Key practices include leveraging data for detection, identifying patterns in customer behavior, and breaking down data silos for a unified approach to fraud detection.
What comes next?
The upcoming Home Office’s money mule action plan is awaited. Meanwhile, the FCA stresses the importance of maintaining adequate anti-fraud controls, warning that regulatory actions will follow if firms fail to comply. Embracing innovative solutions is essential in the fight against fraud.
To discover more about detecting and preventing muling activity, read Resistant AI’s APP fraud whitepaper and our fraud and AML glossaries.
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