Uncovering the dark world of fraud and money mules

Earlier this year, it was revealed that the amount of fraud committed in the UK more than doubled to £2.3bn in 2023, marking the second-biggest year for scams in the last two decades

The number of reported cases rose by 18 per cent to a three-year high, while the number of high-value cases over £50m increased by 60 per cent year-on-year in 2023.

Rising trends in fraud

These statistics are shocking, but behind the headlines lie real people whose lives have been upended by fraud. Financial loss aside, victims can experience emotional, psychological and health impacts, as detailed in a recent government report.

The report touches on the changing nature of fraud, in addition to the importance of identifying vulnerable customers, whether by circumstance or social factors. But while many recognise that vulnerable individuals are more likely to be victims of fraud, there’s an increased risk of them being part of it to consider.

Money mules: Enabling criminal operations

‘Money mules’ are defined as individuals who transfer illegally acquired money on behalf of others, often as part of a money laundering scheme. According to the UK Home Office, around 23% of money mules are under 21. They are often groomed by criminal gangs, who offer them the prospect of making easy money.

Money mules can be knowingly or unknowingly involved in these criminal activities. Often, they may have been manipulated into believing a cover story, or offered cash in exchange for the use of their bank account – receiving stolen funds and then transferring them to another account.

It’s important to uncover the reasons behind this unsettling trend to prevent it from spiralling further, with technology, regulatory frameworks, and community engagement all key to creating a safer society.

The making of a money mule

During the pandemic, money mule recruiters targeted those looking for work or ways to earn easy money, by posting fake job adverts.

It’s no big surprise that there was a surge of money mule activity during this time, due to the context of economic instability and high unemployment rates, meaning many people were more vulnerable to exploitation.

Nevertheless, Cifas estimates that there were 37,000 bank accounts which demonstrated behaviour associated with mulling in 2023 – proving this is a continuing problem.

Despite the perception that money mule activity only occurs in the dark corners of the internet, criminals will post adverts on legitimate job websites or infiltrate popular groups or special interest pages to seek out suitable targets.

The increased ease of global communication has fuelled this activity, making it easier for criminals to operate across borders and enable mules to move money through different countries.

This is all happening amid a backdrop where online transactions and digital banking have become the norm, meaning the opportunities for criminals to exploit these systems have grown at an equal rate. In turn, the increase in online fraud creates a higher demand for money mules to launder the proceeds.

Navigating the prevention maze

While progress has been made, to increase the detection and prevention of mule operations those working to prevent fraud and money laundering need to collaborate further.

Strengthening information and sharing mechanisms between different organisations is key here. If one team detects online fraud, the details they uncover can be valuable for those combating large-scale money laundering.

Various, tangible measures can help protect consumers, companies, and wider society against new and advanced methods of online fraud and money laundering, from artificial intelligence (AI) to awareness campaigns.

Using AI and advanced systems

Robust AI-based solutions help prevent fraud in real-time, enabling fraudsters to be stopped before the repercussions can be felt. Automating manual investigative processes saves time and enhances accuracy, with such techniques also allowing investigators to unearth previously unknown relationships that may reveal organised crime.

Rather than just monitoring outgoing transactions, when evaluating which data to input and assess, organisations should also account for incoming transactions to reduce the risk of false authorised transactions and account takeovers.

Continuously updated programmes to raise public awareness should also be implemented to enable people to better protect themselves. One example of progress this year is a newly funded post at The Children’s Society to raise awareness of child financial exploitation.

Further regulation will also help to disrupt money mule activity and, importantly, support exploited victims. For the best chance of success, a multifaceted approach is the way forward – making the most of developments in advanced technology to detect and reduce money mule activity.

Find out more about solutions to tackle fraud and anti-money laundering.

This piece was written and provided by Carlos Sovegni, SAS EMEA & AP Fraud & Security Intelligence CXP Director, at SAS