Preventing Money Muling activity is a historical problem for financial institutions, not only for damage to the bank’s image but also for the extension of its attack surface.
By Alessandro Ferraro, Security, Anti-fraud and Threat Intelligence BDM at Kirey Group
Preventing Money Muling activity is a historical problem for financial institutions, not only for damage to the bank’s image resulting from these recycling activities but also for the extension of its attack surface to an increasing number of potential frauds and the need to protect itself better and better.
In recent years, the phenomenon has worsened greatly: this is demonstrated by the operations conducted by the State Police which, in the context of the fight against financial cybercrime, defines the "money mule" as one of the most alarming cybercrime phenomena, endemic throughout the world.
During the European Money Mules Action (EMMA) operation 4843 fraudulent bank transactions have been detected and more than 1300 independent investigations have been launched, preventing fraud with an estimated damage of EUR 33.5 million. The fined money mules were 3,876 and 212 organizers and coordinators of these activities were identified.
The operation is in its sixth edition and it was conducted in the various European countries during 2020 as the result of a shared work of all foreign police forces engaged together with the Italian Police It was also carried out with the support of over 500 banks and other financial institutions.
Banks, in fact, are at the forefront of countering the phenomenon because they understand its evolution. The phenomenon’s causes are the advent of new instant payment schemes and the evolution of increasingly rapid and immediate online services that greatly reduce the time available to financial institutions to carry out anti-fraud checks (or AML) before the money is transferred.
A further element that plays in favor of cybercrime is the advent of cryptocurrencies, which today make it even more difficult to track money.
A third and final element to facilitate the spread of money muling is the digital transformation of onboarding procedures.
Today, you no longer must go to a branch to verify your digital identity or to open an account, security checks can also take place at a distance. In this context, new fintech companies are constantly emerging, operating on the market with simplified onboarding procedures and minimum controls for the opening of new current accounts, often giving priority to usability and simplicity as a competitive advantage at the expense of security controls.
How to mitigate money muling: starting from onboarding
In order to combat this phenomenon, it is necessary to launch new actions that are capable of triggering an alarm bell when the activity is comparable to that of a mule account.
In particular, it is necessary to adopt security solutions that go to perform further controls during onboarding, as a stage perhaps more critical in the creation of a mule account, and then add controls on the operational part of the current account.
It is therefore necessary to determine the anomalies in the account’s behavior by crossing incoming and outgoing payments. One of the main actions of anti-fraud solutions is traditionally to track all outgoing movements to analyze behaviors and to have a complete visibility on the operation against.
The ten-year expertise of Kirey Group in the anti-fraud field, from the design of solutions to implementation on the market using the technologies of the best vendors has allowed us to do so, supporting customers not only on the technical part but also functional support: a job that needs to be done meticulously through its own fraud analysts.
Historically we provide integrated solutions for PSD2 compliance and ranging from behavioral analysis, transactional, end points to the logic of passive biometrics and machine learning, today specifically created with the aim of combating money muling.
The expertise of the field on the world of anti-fraud represents an added value that should be put in place also to maintain effective the solutions that the institute has adopted for the protection compared to what will be the evolution of performance and detection capabilities.
In order to prevent fraud and prevent this phenomenon, I believe, in fact, it is also increasingly important to adopt an integrated approach that allows for centralization and correlation of information from different fields - for example, not only the entry and exit of sums but also what happens at endpoint level, considering the proliferation of new devices that are used to connect to accounts.
Today an online banking service is used by traditional channels such as browsers but also by smartphones, tablets, and increasingly popular third-party applications that also need to be monitored.
Algorithms and logic of machine learning will be more and more fundamental to succeed in doing so but will have to be accompanied by the right flexibility and ability to understand what the features and specific needs of the organization are so as to customize them according to new attack patterns and emerging threat trends.
Money muling can be mitigated only thanks to the right balance between technology and expertise, relying on qualified partners who understand the dynamics and support the institutions in the choices to combat the phenomenon, but also continuing to promote, as banks have done for years, a greater awareness of users through information campaigns.