Illustration of a customer becoming a money mules and how banks can detect muling activity with AML

Money mules refer to the accounts fraudsters use to receive fraudulent funds. Mules themselves can come in many different shapes and sizes. 

Banks Warning Customers About Money Mules

For example, there are purpose-opened mules. These are accounts that fraudsters open with the pure intention of using them as money mules. 

But there are also unwitting money mules. This is when fraudsters convince once-legitimate customers to allow them to use their account for muling purposes. That customer then becomes a conduit for moving fraudulent funds through the system. Witting mules, on the other hand, are customers who ignore red flags and help a fraudster accept a suspicious payment.

With unwitting money mules in mind, recently we’ve seen banks such as Santander, Barclays, and Lloyds Banking Group publish public warning messages to consumers, alerting them to the risks of acting as a mule. Lloyds and Barclays warned consumers of the potential prosecution risks, which include up to 14 years imprisonment, as well as the financial repercussions of potentially struggling to obtain banking and credit services in the future. 

Age and Other Data Around Money Mules\

However, despite these warnings, the data from the banks show that money muling continues to run at its highest rate of all time. While the banks agree that it’s the younger generation that is most vulnerable to money muling. Santander, for example, reports the mean age of a mule in 2022 is 31. That’s not to say that older groups aren’t susceptible to becoming money mules. Lloyds reported a 29% in increase people over age 40 involving themselves in muling – a particularly sharp rise.

So what should both banks and consumers consider when it comes to improving the prevention of money mules? From the consumer’s perspective, the advice is pretty simple. 

3 Key Tips for Consumers to Stop Money Mules

  1. If somebody approaches you on social media or any other channel and asks you to provide a service in exchange for a small fee, ignore it. 
  2. Never give someone you don’t know access to your bank accounts. 
  3. Never provide any of your financial information to people you don’t know or trust. 

How Banks Can Stop Customers from Becoming Money Mules

From the bank’s perspective, the volume of purpose-opened mule accounts where false or fake identification is used to trick the bank’s onboarding systems is actually quite small. The bigger risk to the banks is once-legitimate users selling their accounts and credentials to fraudsters to use as mule accounts. The other risk is fraudsters convincing legitimate customers to allow them to transfer money through their accounts in exchange for a fee. Broader economic issues such as inflation, recession fears, and unemployment increase or decrease this risk. 

Here are two things banks should consider to address these challenges:

First, look at ongoing lifecycle risk propensity. This means analytically looking for subtle changes in account behavior or subtle ways in which the customer starts to interact differently with their account. Use that as a flag for investigation. 

Second, look at inbound transactions in the way in which banks have traditionally analyzed outbound transactions, but from a fraud perspective. Think about how often someone receives transactions and the typical amount that they normally receive. Then use that as a baseline to flag anomalies and potentially freeze funds. Be sure to validate the intent behind deposits before allowing customers to access them.