BioCatch puts spotlight on money mule problem, biometric solution

Money mules move money, knowingly or not, for criminal enterprise. They can be students, or people in financial straits; they can be offered easy money, or tricked into being the conduits for money laundering. And they are everywhere.

According to a new report from BioCatch, money laundering through mules has reached epidemic levels. The behavioral biometrics firm’s 257 customers in the financial sector identified and reported almost 2 million bad mule accounts in 2024.

“The tip-of-the-iceberg metaphor is tired and overused,” says BioCatch Director of Global Fraud Intelligence Tom Peacock, in a release. “But these 2 million mule accounts our customers reported in 2024 likely represent only a fraction of the money laundering accounts either in use or lying dormant within the world’s 44,000 financial institutions last year.”

The white paper on global money mule networks looks at how behavioral and device intelligence can detect and expose money mules in different territories.

Because, according to SVP Emerging Solutions and Network Kevin Donovan, “it is imperative to generate a wider understanding about the fundamental role that mules play in supporting a financial crime operation and how interlinked fraud, money laundering, and financial crime truly are.”

Donovan says that “while Europol links 90 percent of money mules to cybercrime, the rest of these accounts launder the proceeds of a litany of other offenses. And they’re all part of the same criminal ecosystem. Scammers employ victims of human trafficking. Investment scam victims act as money mules.”

“Once we accept that every online fraudulent and financial crime scenario that moves money digitally requires a mule to execute that activity, we can anticipate and proactively disrupt these actions.”

U.S. youth looking for a side hustle turn to being money mules

The U.S. saw a 14 percent rise in money laundering cases between 2019 and 2023.

BioCatch’s report says that, in the U.S., “mule activity is usually seen on ‘drop accounts’ that are opened specifically for mule activity, typically using true identities, which slip through banks’ onboarding controls.” Freshly minted adults in the 25-35 range are especially vulnerable to the offer of a side hustle.

BioCatch says the increase in digital fraud and scams is leading banks to adopt new technologies to hunt down bad accounts, and that the U.S. has recently seen some high-profile fines for insufficient security controls. Those caught muling face stiff consequences, which many aren’t aware of: the average money laundering sentence in the U.S. is 71 months.

Business accounts popular targets for UK mules

It’s even worse in the UK, where money laundering can come with a penalty of up to 14 years in prison. Regardless, money laundering is on the rise, as mules leverage fraudulent business accounts that are easy to open, “requiring little in the way of identity checks and scrutiny of background information,” but also have a tolerance for higher value payments. The National Crime Agency estimates £10 billion is laundered through the UK banking system every year.

The Payment Systems Regulator (PSR) in the UK has accelerated requirements for banks to identify bad accounts. “With shared liability, receiving banks must now pay 50 percent of scam refunds,” says BioCatch. “Therefore, harboring mule accounts,

which fraudsters use to receive and then transfer away the proceeds of scams, will now cost banks money.”

APAC, LATAM face regulatory hurdles, but cooperation can help

BioCatch says the APAC region, while facing challenges with inconsistent regulations and limited resources, shows “encouraging collaboration” between financial institutions, law enforcement and regulators in countries such as Australia, Singapore, and Hong Kong.

Gambling is a priority issue, as are international students, which money mule networks look to exploit.

In Latin America, “generally, there is a lack of regulatory sanctions for banks that have mule accounts, de-incentivizing the clean up.” And in the Middle East, “efforts to modernize their banking sectors have led to efforts to strengthen AML regulations,” with “significant international cooperation among countries via the Gulf Cooperation Council (GCC) as well as the Financial Action Task Force (FATF).”

Identifying mules’ wider network helps shut down fraud rings

BioCatch’s report includes a fascinating case study with a visual breakdown of how biometric behavior analysis of swipe and typing patterns on devices helped identify mule activity connected to larger networks.

A key learning is that (so to speak) no mule is an island. “We have found network analysis to be an essential part of detecting mule accounts,” BioCatch says, “because it  enables banks to trace and understand the complex relationships among accounts and users involved in fraudulent activities.”

“By identifying an account and evaluating the wider network to which it belongs, banks can shut down more accounts and address the real problem: the criminal network behind the laundering.”

For this purpose, BioCatch provides its Scout product, an “investigational tool” that analyzes and processes high-risk activity flagged by BioCatch’s Account Takeover and Mule Account Detection software, then visualizes the results using network graphs.

Article Topics

AML  |  behavioral biometrics  |  BioCatch  |  biometrics  |  financial services  |  fraud prevention