Around one in every 100 current account applications is now fraudulent, with money muling often being behind such incidents, according to a financial information company.
Money mule activity is often behind bogus applications which are detected or prevented, accounting for more than two-fifths (42%) of reported first-party current account fraud, Experian said.
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First-party fraud happens where a person knowingly misrepresents their identity or gives false information, which could lead to financial gain.
Money muling is a criminal activity. Those taking part allow their bank accounts to be used by others, in exchange for cash.
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Funds deposited in these accounts are often the proceeds from authorised push payment (APP) fraud, when people have been tricked into transferring money by a fraudster.
The money is eventually distributed to the fraudster’s own accounts but it can be harder to trace if it has already passed through accounts belonging to other people.
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Funds held in a mule account are often moved between two and three others before being transferred to international accounts or in some cases, crypto wallets, and then reintegrated into the UK financial system, Experian said.
Accounts being used for mule activity tend to be newly opened but the holder will often have several older accounts that can continue to be used to transfer funds if the newer one is closed, it added.
People need to think twice if they are approached and asked if money can be transferred Eduardo Castro, Experian
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Eduardo Castro, managing director, identity and fraud, Experian UK and Ireland, said: “Many people don’t realise that acting as a money mule is illegal and carries the risk of prosecution.
“Mules, especially young people, can be tempted by offers advertised on social media sites to let their accounts be used with the promise of financial gain, but others are unwittingly duped into it by fraudsters.
“People need to think twice if they are approached and asked if money can be transferred, as it will almost certainly be fraudulent funds.”
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To help account providers tackle the problem and ultimately prevent fraudulent funds entering the mainstream financial system, Experian has launched Experian mule score.
By analysing account opening history and turnover activity, as well as the characteristics of thousands of confirmed mule cases, Experian said the initiative can help banks and other account providers to identify, investigate and close accounts suspected of being used to deposit proceeds from fraud.
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Its analysis is based on data from National Hunter, which helps the finance industry to prevent fraud.
