November 1, 2022

Money Mule And Crypto Schemes Now Top Money Laundering Threats, According to New Research from Feedzai

  • AML professionals cite money mule schemes as the tactic most commonly used by money launderers, followed by multi-customer cross-wallet activity.
  • Using crypto exchanges to clean dirty cash is the third most common money laundering scheme, but just 26% of AML professionals say their firms evaluate crypto risk  
  • Data sharing between AML and fraud teams helps spot money laundering mules but one in five firms don’t collaborate internally  
  • Most AML professionals think a RiskOps approach bolsters AML efforts, yet most are not prioritising it as a top compliance goal 

San Mateo, Calif., London, United Kingdom & Lisbon, Portugal – November 1, 2022 – Money mule schemes, multi-customer cross-wallet activity and the use of crypto exchanges are the most common money laundering techniques, yet most firms are failing to make use of available technology to mitigate the threat, according to the latest research from Feedzai, the world’s first RiskOps platform for financial risk management.

The State of Global Anti Money Laundering Compliance Report surveyed 636 Anti-Money Laundering (AML) compliance experts, representing 77 companies around the world, most of them from the financial services industry, and overall 74% of respondents cited money mule schemes – both unwitting (44%) and witting (30%) – as the most common money laundering threats.

Furthermore, 56% said that multi-customer, cross-wallet payment activity – a favored tactic of money launderers as it enables them to move funds between different accounts to avoid detection – is the second most common money laundering typology.

The research also found that the crypto market is increasingly being targeted by money launderers; more than half (51%) of the AML professionals surveyed said the use of crypto and other non-compliant exchanges is the most common money laundering threat, while 19% cited crypto ATMs.

When asked what they believe the biggest challenges to their AML programs will be over the next two years, the top answers were ever-changing AML regulations (17%) – specifically around emerging markets and multi-customer, cross wallet activity – and crypto/blockchain (16%), followed by product implementation (7%).

However, despite citing crypto abuse as one of the biggest AML threats and one of the most significant challenges, just 26% of firms currently monitor crypto risks. Furthermore, AML professionals also believe data sharing bolsters AML efforts, but 19% admit their AML and fraud teams do not share data – even though a RiskOps approach helps identify money laundering sooner – and 15% ‘don’t know if they do.

Feedzai’s research found that most respondents believe a collaborative approach to data is vital in the fight against money laundering; 61% said automated collation of data from multiple vendors will be a top AML/KYC (Know Your Customer) trend over the next five years, while half (50%) said using a RiskOps approach for data sharing between FIs will bolster anti-money laundering efforts.

However, when asked what their main goals were for 2022, just 29% said creating a single customer view and less than a quarter (23%) said increasing data sharing between company departments. The top three priorities were achieving Perpetual Know Your Customer (pKYC) (54%), reducing false positives (54%) and accelerating AML investigations (45%).

Nick Parfitt, Principal, AML SME, at Feedzai said: “Money laundering threats are constantly evolving. Our data shows that multi-customer, cross-wallet payment activity to move funds between different accounts, and the use of crypto exchanges are the top money laundering tactics, and that doing more to address these challenges are all top concerns for AML compliance teams.

“Yet, most respondents named implementing pKYC and reducing false positives as their main goals for 2022, revealing there is still some misalignment on how to address AML going forward.”

“AML compliance professionals often feel like they are constantly catching up to address the latest financial crime patterns, frequently using yesterday’s technology and tools to address tomorrow’s money laundering challenges.”

“Taking a RiskOps approach provides a path forward to make better use of data, do more to address the threat of cryptocurrency and enable AML teams to demonstrate their effectiveness and root out money mule activities.”

Multi-Customer Cross Wallet Activity:

Multi-customer cross wallet refers to a customer’s ability to have several wallets such as Google wallet, Apple wallet, virtual crypto and anonymity with those wallets. They have multiple wallets with different institutions and there isn’t any transparency.

 

Media Contacts

Feedzai pr@feedzai.com