Shutting down the mule trade

Education campaigns on what to look out for are everywhere and sadly most people have a story of someone they know who has been duped by increasingly sophisticated scams.

"Some money mules are the victims of scams themselves. Many are caught up in a romance scam and become unwittingly involved in moving money between accounts for the scammer.”

According to the Australian Competition and Consumer Commission’s ScamWatch, Australians lost a record total of $3.1 billion to scams last year, an 80 per cent increase on 2021. Almost 240,000 different scams were reported to the ACCC in 2022.

While customers can do a lot to protect themselves against the scammers, ANZ has been boosting its investment in new technologies to fight the evolving threat – which have prevented about $78 million from going to cyber-criminals in the last 12 months alone. This includes new digital biometrics capabilities, sophisticated new algorithms and enhanced monitoring of fake phishing sites.

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ANZ is this month launching a new Scam Safe series to highlight the latest developments in new technology, defense mechanisms and customer education measures to help take the fight to scammers. Regular updates will showcase the evolving threat landscape and what’s being done to counter it.

One key role banks can play in the scam prevention value chain is helping to choke off the supply of money to the scammers by targeting the accounts through which they move their ill-gotten gains.

These are called “mule accounts” operated by so called money mules. A money mule is a person (or company) who is recruited by criminals to transfer illegally obtained money or goods on their behalf.

Some money mules are unaware they are involved in criminal activities and are typically used to receive and distribute the proceeds of many crimes, including fraud and scams. Mules are usually asked to receive funds into their bank accounts and transfer it to another account or remit it through alternative payment methods.

Unsuspecting victims

Some money mules are the victims of scams themselves. Many are caught up in a romance scam and become unwittingly involved in moving money between accounts for the scammer.

Others could have been approached as part of a work from home job scam – where they enter into an agreement to shift money between accounts for a financial return, unaware or oblivious to the illegal nature of the transfers.

Scammers can also use compromised identities to open mule accounts by obtaining personal information – acquired through various means, such as data breaches, phishing attacks or purchasing stolen data on the dark web.

Mule accounts are a big problem globally. It is estimated that money mule accounts process an estimated US$3 billion in fraudulent financial transfers each year through US financial institutions, according to data from US technology provide BioCatch.

The risk of money laundering through Australian banks was rated "high" by financial intelligence agency AUSTRAC in a 2021 report. The agency noted the use of mules as a key feature of criminals moving money overseas.

By identifying and stopping these accounts, banks can disrupt the flow of money, making it more difficult for scammers to profit from their illegal activities.

Mule accounts are often linked to larger criminal networks involved in organised crime, fraud and scams. Identifying mule accounts can provide valuable information about individuals or groups behind scams.

Disrupting the trade

ANZ recently began a pilot program using a new technology to identify and close suspected mule accounts. Using artificial intelligence and machine learning the program detected 1400 mule accounts that were linked to fraud, scams, money laundering or other financial crimes.

Some were shut down and others were placed under investigation, cutting off the vital flow of funds to potential fraudsters, scammers and money launderers.

Following the pilot the mule detection technology will be implemented across all ANZ’s security systems next month. It will be supported by a new and dedicated mule detection team who will work alongside ANZ’s 440 customer protection specialists.

By tracking and stopping these accounts, banks can identify other criminal groups through social network analytics which can often lead to the dismantling of additional networks and prevent future scams.

By identifying and blocking mule accounts, we starve criminals of the resources they need to carry out their illegal activities. And by disrupting the infrastructure that supports scams, it becomes more difficult for these online criminals to operate and will go a long way to protect customers and the broader community.

There is a whole of community response needed to prevent scams. While banks play a critical role, customers can also protect themselves by remaining alert to unsolicited contact and requests to move funds between accounts.

Shaq Johnson is head of customer protection at ANZ.

ANZ’s customer protection teams and systems operate 24/7. Customers who believe they may have been a victim of a scam should contact us immediately, on 13 33 50 or visit us at http://www.anz.com.au/security/report-fraud/for more information.

For more information on the types of scams and how to protect yourself visit http://www.anz.com.au/security/types-of-scams.