11 December 2018
Vocalink’s Anti-Money Laundering Solution Combats Financial Crime
Today, with Pay.UK’s Faster Payments team we announced the official launch of the anti-money laundering Mule Insights Tactical Solution (MITS), following a successful pilot by participants of the UK’s real-time payment service.
This ground-breaking technology, which leverages our AML Insights solution, enables suspicious payments to be tracked as they move between bank and building society accounts regardless of whether the payment amount is split between multiple accounts, or those accounts belong to the same or different financial institutions. MITS creates a visual map of where and when money has moved, providing data driven insights and new intelligence for fraud teams to take action.
By bringing together payments data from multiple banks and overlaying it with cutting-edge proprietary analytics and algorithms, MITS can accurately pinpoint individual accounts (known as mule accounts) involved in suspected illegal activities. MITS will help the UK’s financial institutions detect and respond to criminal activity across the payments network, and has the potential to disrupt fraud and money laundering worth millions annually.
During the pilot, based on a limited number of suspicious transactions submitted for tracing to test MITS operational capability:
- Thousands of UK accounts were subject to further investigation due to suspicious activity - a significant percentage of which were subsequently identified as mules.
- Multiple, large, well-concealed money laundering rings were uncovered - where money was being moved between networks of accounts and institutions.
- Hundreds of mule accounts previously completely unknown to authorities were identified.
- The insights offered by the new tracking service further reinforced banks’ fraud prevention processes, reducing the time necessary to identify and take action against suspected accounts.
Mules are required to launder funds fraudulently obtained as a result of Authorised Push Payment (APP) fraud, phishing or malware scams. They are recruited by a variety of methods, including spam e-mails, adverts on genuine recruitment websites, approaches to people with their CVs available online, instant messaging and adverts in newspapers. Many may be unaware they are committing a criminal offence that can lead to severe penalties.
Now MITS is fully operational identification numbers are expected to increase as more suspicious transactions are submitted by banks and building societies for tracing.
Paul Horlock, Chief Executive of Pay.UK, said: “This new initiative is a significant milestone in the UK’s fight against financial crime, giving the industry the potential to track the flow of illicit funds on a greater scale and with more speed and accuracy than ever before.
“The effective introduction of MITS can help to tackle money-laundering practices head-on and further disrupt criminal activity. Unfortunately there is no silver bullet to tackle fraud; by working in collaboration, financial institutions, Payment System Operators like ourselves, Government and law enforcement agencies all have an important role to play in helping to protect consumers. We believe this project can play an important role as one of the first stages in a cross-agency effort to disrupt the criminals who are responsible.”
MITS is underpinned by our financial crime-fighting solution, AML Insights (Anti-Money Laundering Insights), which uses advanced data science across payments data from multiple institutions to help them address the issue of money laundering and mule networks. MITS was created as part of a package of measures released and under development by the industry to further protect consumers online.
David Rich, Executive Vice President, Vocalink Services, comments: “The innovative data science behind MITS enables us to spot and trace illicit accounts like never before. By bringing together payments data from multiple banks in a secure way, we are able to deliver a new kind of intelligence that analyses billions of transactions, connects the dots and then identify how the laundered money is split, layered and dispersed across the whole banking network. Banks are unable see the complete picture of the movement of stolen or illicit funds as they only have access to information within their own institution. This is showcasing industry collaboration at its very best.”
MITS provides yet another barrier to fraudsters and is a further step towards the industry’s wider goal of reimbursing victims of fraud who have had their money stolen. Unfortunately under current law once funds have been moved to an alleged scammer, the customer no longer has legal title to them. This generally means a court order is needed to return the funds - the finance industry is calling on the government and regulators to work with them to resolve this.
The UK is not alone in experiencing increasing levels of money laundering and fraudulent activity. While the rise in modern payment systems across the globe is advantageous for consumers, businesses and governments, it also provides money launderers and fraudsters with a faster way to move money. Over 25 countries have adopted real-time payment schemes and it is estimated that $2.1 trillion is laundered globally every year. Vocalink Analytics’ international fraud-fighting product, AML Insights (Anti-Money Laundering Insights), leverages the advanced technology developed by Vocalink and applies to other countries across the world.
Case Studies – In relation to real cases occurring in October 2018
Images of the maps produced by MITS of these fraud networks are available on request.
Case 1 – Organised Crime Ring
One account highlighted as a Suspect Mule by MITS was linked to a further 15 accounts that appeared to be part of the same organised crime ring. There was evidence of payments being cycled between some of the accounts. All accounts have now been blocked.
Case 2 – The Business Account
Following initial suspicions regarding a business account it was blocked. However the account holder did not make contact to find out why raising further suspicions. Upon profiling the account, the bank found an unusual number of credits from different sources that in no way matched expected account activity for the business. Using MITS the bank checked where the account had been receiving the credits from and who else had been receiving or sending funds to these accounts uncovering a fraud ring. Investigations are ongoing but so far 29 active suspect accounts have been identified.
Case 3 – Network of Traced Funds – Faster Payments
Following a bank receiving notification from a customer that they were a victim of fraud, details of the initial fraudulent transaction were traced using MITS and it was the discovered the account was a fourth generation mule account in a complex network: The account in question was a classic example of a mule, receiving a large volume of payments before rapidly sending these out of the account. The majority of funds were being sent on to another of the bank in question’s account, which upon investigation was also found to be receiving large volumes of payments and rapidly spending or distributing the funds further. As investigations progressed a fraud ring of over 70 active accounts was uncovered, all within the same bank.