Money Mule Schemes: How Will Organizations Collaborate to Prevent Them in the Future?

September 14, 2022

During our first session of Fraud Office Hours, an attendee asked, "How do you see organizations being able to collaborate in the future to prevent complex money mule schemes?" Watch this video clip to see how Unit21's Head of Fraud Risk, Alex Faivusovich, responded.

What is a Money Mule?

According to the Consumer Financial Protection Bureau, "A money mule is someone who receives and moves money that came from victims of fraud. Some money mules know they are assisting with criminal activity, but others are unaware that their actions are helping fraudsters."

For example, if a person you don’t know sends you money and then asks you to transfer the money, either to someone else or to a business entity, you might be serving as a money mule and aiding in fraudulent activity.

In this quick video, Alex explains how organizations might be able to partner up in the future to prevent complex money mules schemes from occurring. Below is the written version of his response.

How Organizations Can Prevent Money Mule Schemes

"I think you have to understand how Fintechs look at money mules, right? Because for a Fintech company, if a person brings money in, they might think, 'Hey, that's great. That is a great user if they bring money in.'

But I think they need to understand if users are using the platform as intended, and using the product as intended, in comparison to users who use the platform to move money from one place to another. And if we're talking about collaboration, something like the Fintech Fraud DAO, (the consortium that we're developing at Unit21), could be used to detect and prevent money mule schemes from occurring.

For example, if you suspect a user is not really using a platform as intended, and you have the opportunity to query their PII (personally identifiable information), you might find a report from another Fintech or another Crypto Company or from the Trust & Safety people at a Social Media organization saying, 'Hey, I think this person only uses the platform to move money from one place to another,' this is a great way to spot money mules.

Also, when you look at money mules, try to understand if a person operates in a specific geolocation and how this specific geolocation looks for that behavior.

So, for example, if you have a random town somewhere, and suddenly way too many people are actively bringing or taking money out, are they related to each other?

Are they operating with each other?

Is there a bigger fraud ring operating in your ecosystem right now, and it's not just a single person who does muling?

Ultimately, I think consortium is the future of how organizations will work together to prevent money mule schemes from occurring because every participant will have access to data and can query this information if anything looks suspicious."

Looking for more fraud detection and prevention tactics? Check out the full Fraud Office Hours series on-demand.

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