Synectics has unveiled findings from A research project that underscores the importance of perpetual AML checks for detecting money mule activities effectively.
Contrary to prior assumptions, the initial screening isn’t where most mules slip through; rather, it’s the standard KYC screenings’ failure to keep up with mules’ operational tactics, resulting in 75% of mule activities going unnoticed until more sophisticated, continuous screening methods are employed.
In collaboration with three major high street banks, Synectics developed and implemented a continuous customer screening program, termed Perpetual KYC (pKYC). This approach involved real-time rules and data matching across the customer lifecycle to highlight suspicious activities indicative of mule behaviours.
One of the standout insights from the research was the discovery of the median ‘time to mule’, which is approximately eight months. This period highlights how accounts that seem benign can later facilitate fraudulent activities, which conventional periodic reviews fail to detect early enough. Chris Lewis, Head of Solutions at Synectics, noted, “Our findings reveal that at least 75% of accounts that become mules could be overlooked without continuous AML monitoring throughout the customer journey.”
The research also revealed that once an account is activated for mule activities, the actions are rapid and aggressive, with an average of 3.6 incidents occurring across various institutions, often within a fortnight. “The fast and furious nature of mule operations post-activation shows that only real-time detection methods can effectively intercept these fraudsters before they vanish,” added Lewis.
The project further explored the optimal real-time strategies for mule detection, which involved custom rules engines tested in different configurations by the participating banks. Liese Rushton, Fraud Strategy Consultant at Synectics, detailed, “The most effective strategy combined fixed data matching with real-time analysis of behavioural and transactional patterns, achieving a low referral rate with high accuracy.”
The urgency for effective mule detection has been amplified by the recent implementation of the Payment Services Regulator’s (PSR) mandatory reimbursement rules, making banks liable for refunding victims of Authorised Push Payment (APP) fraud. “Effectively identifying mules not only curbs financial fraud but also shields banks from significant reimbursement responsibilities,” concluded Lewis.
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