On 19 October 2023, the FCA published the key findings from its multi-firm review of payment account providers’ systems and controls against money mule activity. The FCA outlines its key findings, including examples of good practice, areas for improvement and how firms manage the risks of money mule accounts in a proportionate way.
The multi-firm review rendered the following key findings:
- Some firms are working to address the challenges of money mules by implementing a range of measures and technologies to detect and deter fraudsters from using their organisation and harming their customers for illicit gains.
- Some firms have established proportionate approaches that use innovative solutions including facial recognition systems, device profiling and geolocation. However, despite these efforts, not all firms are responding with the same focus, and some firms need to do more to tackle the problem.
- Most firms use the National Fraud Database as part of their onboarding checks and are sharing information with relevant authorities using lawful gateways and where it is necessary to disrupt and detect fraud. However, the FCA notes that where some firms identify a mule account, they do not always report this promptly on relevant reporting systems, therefore delaying notifications to other firms. Additionally, some firms in receipt of fraudulent funds are not responding swiftly enough to alerts from notifying institutions. More timely reporting could help to close down mule networks.
- Given the prevailing cost of living crisis, some customers might find themselves susceptible to providing their account details for money mule activities under influence or pressure. The FCA is asking firms to improve their communication strategies and awareness initiatives, keeping customers informed about the latest threats.
- The FCA expects firms to take a proactive and proportionate approach to address the problem of money mule activity. This entails strengthening controls during onboarding, improving transaction monitoring to detect suspicious activity involving money mules, and optimising reporting mechanisms for swift action. Firms should also proactively raise consumer awareness about the risks of acting as a money mule in order to protect them.
- The FCA expect firms to establish proportionate systems and controls to manage the problem of money mules and the associated risks. It will use its full regulatory tools, including enforcement action, if it identifies a firm failing to maintain proportionate and adequate systems and controls.
The FCA also notes that the Home Office is due to publish a ‘money mules action plan’ in the coming weeks, and the FCA’s work is aligned to the focus of this action plan to help inform how financial services firms play their part.