Preventing money mule fraud using artificial intelligence

Regardless of the means, the aim of the scam is at all times to exfiltrate stolen money to legal benefactors by means of the mule’s account.

Over the final decade, the accessibility of banking and monetary providers has grown by leaps and bounds. However, there has additionally been a rising incidence of economic frauds. One such scam that has been on the rise is the money mule scam.

A money mule is basically an individual who’s used as a conduit to switch money illegally. Criminals goal victims to get their money transferred using the latter’s financial institution accounts. While lots of the victims (or “money mules”) could also be unaware of their function within the scam, a few of them could also be voluntarily complicit as they obtain part of the money transferred.

Some frequent methods criminals might recruit unsuspecting mules is by the use of seemingly real job commercials, lottery win messages, or abroad holidays and jobs. Regardless of the means, the aim of the scam is at all times to exfiltrate stolen money to legal benefactors by means of the mule’s account.

The not too long ago unearthed robocall scam perpetrated by an Indian name centre defrauded seniors within the US of $8 million. This is an instance of how unsuspecting aged victims had been used as mules.

In India, for the reason that Jan Dhan Yojana was introduced, lots of the zero steadiness financial savings accounts have additionally been made simple targets by cybercriminals, a lot of whom had been used mules to transform illegitimate money to white money, and vice versa.

Key Pain Points for Banks

The largest problem for banks to avert the money mule scam is its very nature. In most instances, these transactions go beneath the radar as they look like regular transactions occurring in unsuspected accounts. Further, small transactions should not even a crimson flag from the earnings tax perspective, and are, due to this fact, not traced. Moreover, it is rather tough to establish these frauds as banks can’t simply confirm if somebody is performing on the legal.

Considering these elements, money mule transactions have a excessive chance of slipping beneath the final danger controls in place at the moment. Nevertheless, these transactions pose a excessive compliance danger for banking and monetary establishments.

How Artificial Intelligence can assist stop the Money Mule Scam

While banks and monetary establishments have a danger grading system for every account, whereby the chance of accounts getting used for illicit actions is assessed, a mule may even be a low-risk account holder with verified KYC and real data.

Companies reminiscent of Karza Technologies work with business stakeholders to plot options that automate the early detection of such accounts. Such AI-based options concentrate on alternate knowledge factors and traits reminiscent of the standard money mule profile, financial thresholds for varied profiles, and many others.

The options make use of algorithms that assist establish patterns and flag any anomalous transactions in addition to consider typical instances the place the chance of an account getting used as a mule is excessive. For instance, the earnings ranges, the everlasting and momentary deal with of the account holder and their proximity to the department, and frequency and dimension of the transaction can be utilized as knowledge factors to hint any irregular exercise for a mentioned account. Such options use distinctive algorithms to create a mannequin that gauges the chance of an account being a mule.

by, Omkar Shirhatti, Co-founder and CEO, Karza Technologies

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