The UK’s Financial Conduct Authority (FCA) recently completed its review of the UK’s National Fraud Database (NFD) – a cross-sector fraud prevention tool in the UK, maintained by the non-profit Cifas. Among the review’s findings, it found the 750 UK firms participating in the NFD offboarded 194,000 money mule accounts between January 2022 and September 2023. More dishearteningly, the FCA determined only 37% of these money laundering accounts were reported to the NFD, highlighting a critical gap in detection and reporting of such conduct.
By comparison, our first ever – and just released – global money mules report shows BioCatch’s 257 customers reported nearly 2 million mule accounts in 2024 alone.
To be clear, this is not an either-or situation. The detection and closing of money laundering accounts around the world is tricky and endless work. Cifas’ National Fraud Database is a vital tool, maintaining detailed records of confirmed fraud cases (including money mule activities) submitted by member organizations across the banking, telecommunications, and insurance sectors. The database facilitates data sharing and collaboration to prevent fraud and disrupt money laundering networks. Entries require a high evidential standard to ensure accuracy and effectiveness in tackling financial crime, making it a crucial component in the industry’s response to money mule activity.
But it can’t be the only response.
The NFD only depicts a portion of the greater money laundering landscape. For a more holistic view, we must turn to mule detection systems that identify risk across the entire customer lifecycle: from the opening of an account to the bank identifying it as a potential tool for money laundering to the point at which it might receive illegally ascertained funds, before the accountholder can then transfer those funds to another account in the mule network.
Tools for detection
The FCA review notes the NFD requires its contributing members meet a very high standard of proof before reporting the account holder as a potential mule. While this ensures accuracy and fairness, it also comes with a significant variation in the proportion of mule cases reported, with some firms reporting as little as 6% of identified money mules while others reported more than 66%.
The review also found few firms conducted real-time checks against the NFD after onboarding customers, leaving them vulnerable to fraud markers added by other firms.
With the world moving to real-time payments the need for firms to adopt detection technologies that can detect mules throughout the lifecycle of an account has never been greater. BioCatch detects mule behaviours across five distinct personas, with detection, crucially, taking place prior to the customer being involved in a historic detection event.
• The Deceiver: These mules are the most complicit, opening an account purely to perpetrate fraud. We detect these mules before they can commit fraud by combining signals from our account opening and money mule models.
• The Peddler: While these mules don’t participate in the actual laundering of illegally ascertained funds, it’s hard for them to plead complete ignorance given that they’ve willing sold use of their accounts for money.
• The Accomplice: This is the archetypal mule, willingly receiving and then transferring away criminal proceeds in return for some easy money.
• The Misled: These customers believe the money they’re receiving is clean. Such customers might receive payment for an item they’ve sold and will not appreciate the funds have come from another victim.
• The Victim: These mules are the least complicit and will likely transact or assist in the compromise of their account without appreciating the intentions of the threat actor. We detect these mules before they can commit fraud by combining signals from our account takeover and money mule models.
Crucially this “pre-crime” approach closes the gap that so-called “rearview mirror” approaches cannot. We enable financial institutions to actively address reputational risk and reduce their operational costs while also ensuring they meet and exceed the expectations of regulators.
In markets such as the UK, the reputational element is not limited to the outcome of thematic review or potential for a regulator to penalise a firm for specific failings. The Payment System Regulator (PSR) requirement that Payment Service Providers record authorised push payment fraud (APP) in their Reimbursement Claims Management System (RCMS) will ensure an unparalleled level of transparency in the UK. With the PSR committing to publish the data on a regular basis, the public will see the relative rates at which UK banks both detect APP fraud and reimburse victims of it.
Improving detection
The FCA has suggested firms focus on five key areas to improve the detection and prevention of money mules.
1 |
Strengthening systems and controls: The FCA calls on firms to ensure their fraud monitoring systems are calibrated to detect suspicious transactions effectively. |
BioCatch offer financial institutions an opportunity to detect mule accounts during opening and use and supports the identification of unwitting mules. |
2 |
Prioritizing data-sharing: The FCA highlights the need for participation in the NFD and other industry-standard databases. It also calls on firms to use those databases to identify and alert other firms to customers that are engaged in mule activity. |
BioCatch leverages network effects to protect its customers, sharing fraudulent device, network, and anonymised account details across institutions to enhance detection. |
3 |
Real-time monitoring: The review highlights the need for firms to use real-time alerts to undertake against the NFD, enabling firms to identify and respond to mule activity before significant harm occurs. |
BioCatch’s mule account detection utilises behavioural intelligence to proactively detect risky accounts before they’re misused. Our focus on the full range of money mule personas assist customer to respond and remediate against distinct forms of risk. |
4 |
Comprehensive investigations: It is acknowledged in the review that investigations into suspected mule accounts should be thorough, well-documented, and consider customers’ vulnerabilities. With firms ensuring they meet the required standard of proof for NFD reporting and providing clear justifications for their decisions. |
BioCatch empowers its customers by providing clear explanations in support of detections. BioCatch Scout supports analysts to explore account misuse via a graphical interface that reveals hidden financial crime risks. |
5 |
Educating customers: Raising awareness about the risks of becoming a money mule is an essential component of prevention. Educational campaigns can help customers recognize and avoid fraudulent schemes, reducing the pool of potential mules available to criminals. |
BioCatch’s early detection supports targeted customer education, especially in situations where the customer is themselves a victim. |
Collaboration and innovation
The FCA stresses that the fight against money mules requires a collective effort, one requiring partnership and data-sharing to disrupt mule activity and protect the public.
BioCatch is a pioneer in assisting firms to meet this challenge. Launched last fall, BioCatch Trust™ Australia is the world’s first inter-bank, behaviour- and device-based, financial crime intelligence-sharing network. It protects customers at Australian member banks against financial crime, scams, and fraud by assessing in real time the trustworthiness of the accounts to which they direct their transfers and payments.
If the network deems a receiving account untrustworthy, it shares this intelligence with the sending bank in real time, allowing the sending institution to suspend and investigate the transaction before any money leaves the sender’s account.
Looking to the future
Money mules pose a significant threat to the financial system and the public. Tools such as the NFD are crucial components in the industry response but must be augmented by mule detection systems that identify risk across the entire customer lifecycle. Initiatives such as BioCatch Trust™ provide firms with real-time solutions to manage various fraud risks, including money mules.
The FCA’s findings underscore the importance of a proactive, unified approach. The issue of money mules can only be tackled through effective detection, investigation, and the sharing of crucial data in a manner that respects the privacy of customers