Criminal networks seek to exploit vulnerable members of the community. They target and recruit them as money mules to launder their proceeds of crime and reintegrate the funds back into the economy. This creates distance between the networks and the crime and helps to avoid detection by law enforcement.
Late last year, we conducted supervisory activity analysing how foreign bank subsidiaries were managing their money mule risks. The campaign assessed how the banks were identifying and limiting these risks.
The campaign found that mule networks were actively targeting retail banking services and that this activity was widespread across the sector. We identified mule activity through patterns such as repeated use of contact details. There was also coordinated account-opening and high volumes of low-value scam-related transactions being sent offshore through digital currency exchanges, remitters and cash.
Banking sector exposed to risks
The campaign focused on foreign bank subsidiaries and how money mule risks affect these entities, some of which have very large customer bases. The findings are also highly relevant to the broader domestic banking sector which face the same significant exposure to money mule risks.
Why strong controls matter
Businesses need to understand and mitigate the risks linked to money mule activity. This activity supports some of the most harmful crime types affecting Australian households, including fraud, scams and drug-related money laundering.
The banking sector plays a central role in preventing and detecting these flows. Weak controls can increase regulatory risk but also lead to poor outcomes for customers.
Banking entities with more complex operations should have more mature risk-based controls. This includes stronger controls for customer onboarding, biometrics and transaction monitoring.
What banks should consider
To help detect and disrupt money mule activity, businesses should make sure they have strong suspicious matter reporting frameworks, effective onboarding controls and appropriate monitoring processes. These measures will also help businesses meet their anti-money laundering and counter-terrorism financing (AML/CTF) obligations.
Actions to consider:
- Treat money mule activity as a prevention issue and address it collaboratively across AML/CTF and fraud prevention teams.
- Take an integrated approach by using prevention and detection controls throughout the customer lifecycle.
- Consider proactive screening to identify when a customer’s details, or variations of those details, are used to open multiple accounts. This may include email addresses, mobile and landline phone numbers, IP addresses, birthdates, surnames and mailing addresses.
- Consider limiting how many accounts one person can create. This can help reduce harm when criminals bypass onboarding controls or take over a genuine customer’s account.
Find out more about money mules risk on our website.