Money launderers and their mules are switching away from current accounts to savings accounts in a bid to bypass stringent bank checks brought about by APP reimbursement rules and AI-based anti-fraud tools.
Reports of savings accounts being ‘used to receive fraudulent or disputed funds’ increased by 63% last year, compared to a 12% increase in current accounts. Overall, fraud filings for this reason are up 17%.
The statistics are supplied by Synectics' data pool National Sira, comprising collated risk and fraud intelligence, sourced from over 150 UK organisations including Tier 1, mid-size, and challenger banks and leading building societies.
While current accounts still see the biggest volume of such activity, the savings account data suggests that money launderers and their mules are attempting to disperse activity across a wider range of financial products.
The data indicates that fraudsters are increasingly bypassing onboarding processes, but also that they are adapting their modus operandi.
Liese Rushton, fraud strategy consultant at Synectics, says: “Post-PSR Mandatory Reimbursement, mules and their herders faced a tactical tipping point. Knowing that account providers would likely scrutinise more transactions across more products (with many focusing on predicting risk using mule-specific AI algorithms), launderers appear to be dispersing their targets."
According to the report, ‘Misuse of facility’ (which aggregates all laundering-related reasons for filing) remains the dominant fraud typology by volume in the UK today. Closely followed by ID fraud.
ID fraud is identified as the main ‘growth fraud typology’ in the UK at this time. Reasons for fraud filings linked to this category include addresses not matching with provided identities, multiple applications using the same address, and the use of false identities - including suspected and confirmed cases of artificially created ‘synthetic IDs’.
Chris Lewis, head of solutions at Synectics, comments: “There’s been a 25% increase in ‘false identity’ reports, this growth almost certainly linked to increased adoption of AI tools by fraudsters - tools which make light work of creating synthetic identities and manipulating genuine ones. We predicted the rise of synthetic IDs in 2023 and see their use in full force today."