UK Home Office Launches 'Biggest Crackdown' On Money Mules

March 5, 2024
The UK Home Office has unveiled a 22-point plan to fight money mules and financial exploitation, focused on disrupting the flow of illicit funds through bank and crypto exchange accounts.

The UK Home Office has unveiled a 22-point plan to fight money mules and financial exploitation, focused on disrupting the flow of illicit funds through bank and crypto exchange accounts.

On Friday (March 1), the UK Home Office published a new action plan setting out how government, law enforcement, industry, regulators and charities will work together to tackle money muling.

The action plan builds on commitments made in the government’s Economic Crime Plan 2, which runs from 2023-26, and its latest Fraud Strategy, launched in May last year.

The Home Office noted that the action plan will cover England and Wales only, as policing in Scotland and Northern Ireland is devolved to local parliaments.

Tom Tugendhat, UK security minister, unveiled the action plan by saying that he is “determined” to stop criminals from financially exploiting the vulnerable, including children and students.

Children, young people and money muling

In the UK, a significant percentage of money mules are groomed for financial exploitation at a young age.

In 2023, according to fraud prevention organisation Cifas, around 37,000 bank accounts in the UK displayed behaviour associated with money muling.

Among individuals who were identified as money mules, about 23 percent were under the age of 21 and 65 percent were under the age of 30.

With reference to data from the National Crime Agency (NCA), the action plan noted that children as young as 11 have been recruited to launder illicit funds.

The recruiters, also known as “herders”, operate in person and online, and are active on social media and gaming platforms that are popular with young people.

“They are often groomed by criminal gangs, who offer them the prospect of making easy money,” said the Home Office.

“Once they are in the system, the gangs will then coerce them into committing further offending, including through blackmail, debt bondage and sextortion.”

Fraud is now the most common crime in England and Wales, accounting for almost 40 percent of all offences, and the majority of organised frauds rely on money mules to launder their criminal proceeds.

What’s in the plan?

The 22-point plan is divided in to five key areas, each with their own joint activities: 

  1. Protecting the public
  2. Understanding the threat
  3. Safeguarding victims
  4. Pursuing criminal gangs
  5. Disrupting transactions

Different agencies will lead in different areas, with some agencies assigned to lead in more than one area.

The Home Office, the NCA and City of London Police will lead on protecting the public, for example, while the Home Office and Cifas will lead on safeguarding victims.

For banks and payment service providers (PSPs), the most actionable areas will be pursuing criminal gangs and disrupting transactions.

Disrupting transactions

The Home Office notes that “most” money muling takes place when the proceeds of crime are transferred between bank accounts or crypto exchange accounts.

Point 17, therefore, instructs the National Economic Crime Centre to establish a public-private cell to strengthen the industry’s response to emerging crypto illicit finance.

Subject to tasking and operational priorities, this could include a focus on how crypto exchanges are being used by money mule networks to move the proceeds of fraud out of the banking system.

Similarly, in point 18, UK Finance is instructed to create best practice guidance for how financial institutions (FIs) should respond to money mules.

“This will improve the support for smaller or newer institutions reporting high levels of mule activity on their accounts and help to standardise a comprehensive response across the financial ecosystem,” the Home Office said.

Point 19 instructs Pay.UK to pilot the Fraud Overlay project, which uses new technology to disrupt networks of fraudulent payments.

Point 22 instructs UK Finance and Pay.UK to implement a data-sharing mechanism that will enable both sending and receiving banks to detect high-risk payments and prevent fraudulent transactions in real time.

And points 20 and 21 instruct the Financial Conduct Authority (FCA) to continue examining firms’ fraud controls and publish findings on money mules, setting out good practice and areas for further improvement.

Industry reaction

Dan Holmes, subject matter expert in fraud prevention at Feedzai, said the action from the government is “absolutely vital” and is a step in the right direction towards tackling money muling.

He added that effective use of technology will be key to FIs’ success in identifying muling activity, as well as cooperation with other FIs.

“Unfortunately, it is unlikely that we will ever see criminals stop cultivating mules, so it is crucial that we help banks identify them, freeze funds and shut down suspected accounts,” he told Vixio.

“We have got to attack this problem from every possible angle if we stand a chance against sophisticated criminals looking to exploit not only weak points in the system, but vulnerable people too.”

When implementing the action plan, Holmes said that FIs should be aware of subtle changes in account behaviour, from changes in the way the customer interacts with the account to changes in the volume, value or cadence of payments passing through it.

“AI and machine learning applied at an account and transactional level can help detect all these changes in customer behaviour and many others,” he said.

“Tech can flag up serious indications of money muling that can be used as rationale for investigation.”

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