The $3 billion problem for US banks

  • Money mules constitute up to 0.3% of accounts at U.S. financial institutions, or approximately $3 billion in fraudulent transfers

  • This estimate is considered low because most mule counts go undetected

  • Emerging attack methods using hybrid bots allow criminals to open mule accounts at scale, new research shows

  • One in 100 money mule accounts are created by a bot

NEW YORK, June 21, 2022 /PRNewswire/ — BioCatch, the global leader in behavioral biometrics, has released new research on the size and scope of the growing money mule problem for U.S. financial institutions. During the first half of 2022, data from BioCatch reveals that money mule accounts account for up to 0.3% of accounts held by financial institutions, and it is estimated $3 billion in fraudulent financial transfers.

BioCatch is the leader in behavioral biometrics, a technology that leverages machine learning to analyze a user’s physical and cognitive digital behavior online to protect individuals online.

Behavioral biometrics leader BioCatch has published research on the growing problem of the money mule for US financial institutions.

According to the Federal Deposit Insurance Corporation (FDIC), there are 124 million American households of which a member has at least one bank accountalthough consumers have an average of 5.3 bank accounts in all types of financial institutions. By applying the results of BioCatch to the approximately 657 million bank accounts in United Statesthis translates to around two million mullet accounts and almost $3 billion of fraudulent transfers in one year. Additionally, research has found that the average mule transaction value is $1,500 – a relatively small number to avoid detection by traditional means.

BioCatch discovered a probable reason behind the increase in the creation of new mullet accounts: the use of hybrid bots that can open new accounts at scale. This is an emerging trend that BioCatch has observed for over a year through monitoring user behavior in the account sign-up process. To circumvent the robust bot detection capabilities deployed by most banks, criminals have developed hybrid bots that allow parts of the application to be completed manually by a human and other parts to be completed in an automated way. For example, criminals typically use a script to fill in data such as a social security number or phone number, while there is human intervention with the pasting of data into other PII fields such as l address and typing entries.

“Our researchers have determined that one percent of mule accounts are created by bots,” said Gadi Mazor, CEO of BioCatch. “Financial institutions should expect the use of bots in the account opening process to continue to grow, as they are a critical link in the fraud supply chain allowing criminals to withdraw money. money at the end of the money laundering process. However, mule activity can be detected at all stages of a customer’s banking journey through behavioral biometrics.”

Mule accounts are a worldwide problem, and not just isolated for United States. For example, in the UK, 156 million consumer bank accounts translate to 468,000 mule accounts and $702 million (or £550 million) of fraudulent transfers. According to Europol, more than 90% of money mule transactions are directly linked to cybercrime. Cybercriminals open mule accounts using stolen or fake identities, or criminals work with accomplices who use their personal information, knowingly or unknowingly, to open mule accounts. The increase in mule activity is particularly alarming among account holders under the age of 30. Last year, UK fraud prevention organization Cifas reported a 76% increase in accounts for 21-30 year olds who showed classic signs of mullet activity.

Detecting mule activity has long been a challenge for financial institutions, recent research from Aite-Novarica shows that over 80% of fraud managers surveyed believe more can and should be done to mitigate the risk of mule activities in the industry.

“If mule activity continues to be overlooked as a risk actively mitigated by a well-defined and officially ordered program, then faster payments and the tendency of fraudsters to target customers with scams such as BEC and Authorized Push Payments will fuel significant growth in fraud,” said Trace Fooshee, Senior Analyst Fraud and AML at Aite-Novarica. “It could also lead to a wider variety of more pernicious crimes ranging from terrorism to human trafficking.”

In February, BioCatch announcement it received a US patent for its innovation, first in its class Mule account detection solution, which monitors user interactions to identify mule bank accounts used for money laundering or terrorist financing. Based on real-time monitoring of user behavior and ongoing account monitoring, BioCatch’s solution can determine whether the online banking account is being used as a mule account to illegally receive and transfer money. silver. In addition to the Mule Account Detection patent, BioCatch holds 70 pending patents for its behavioral biometrics and cybersecurity solutions across United StatesUK and Europe.

For more information on mule detection, download a joint BioCatch and Aite-Novarica case study here: The Emerging Case of Proactive Mule Detection: Going on the Attack to Defend Reputational Risk.

About BioCatch

BioCatch is the leader in behavioral biometrics, a technology that leverages machine learning to analyze a user’s physical and cognitive digital behavior online to protect individuals online. BioCatch’s mission is to unleash the power of behavior and provide actionable insights to create a digital world where identity, trust and ease seamlessly coexist. Today, BioCatch counts more than 25 of the top 100 global banks among its customers who use BioCatch solutions to fight fraud, drive digital transformation and accelerate business growth. BioCatch’s Client Innovation Board, an industry-led initiative including American Express, Barclays, Citi Ventures and National Australia Bank, enables BioCatch to identify creative, cutting-edge ways to leverage unique attributes of behavior for prevention fraud. With over a decade of data analysis, over 70 patents filed and unparalleled experience, BioCatch continues to innovate to solve tomorrow’s problems. For more information, please visit www.biocatch.com

Contact:
Sarah Horowitz
[email protected]

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