BANKS and institutions in Bahrain and the GCC should monitor key indicators to identify potential money mule activity, including the account’s age, its transactional history and any sudden or unusual changes in behaviour, a top expert has recommended.
This is due to the rise in money mule activity in the region and an increase in fraudulent activity and scams, as well as the rise in popularity of instant pay applications.
Speaking to the GDN, LexisNexis Risk Solutions fraud and identity director Rob Woods explained that the identification of money mules goes a long way to reducing instances of fraud in Bahrain.
“Fraudsters rely on these accounts to cash out the proceeds of crime,” he said.
“The rise in fraud has expanded the payment networks needed to facilitate money mule activities.
“While at first they may operate within the same financial institution, subsequent generations often extend cross-border or even out of the region.”
A money mule is someone who transfers or moves illegally acquired money on behalf of someone else.
Criminals recruit money mules to help launder proceeds derived from online scams and frauds or crimes like human trafficking and drug trafficking.
Money mules add layers of distance between crime victims and criminals, which makes it harder for law enforcement to accurately trace money trails.
Fraudsters usually recruit people such as students through social media, and use fake or stolen identities to set up accounts.
Fraudsters prey upon vulnerable people, promising them legitimate work to ease financial difficulties, only to coerce them into creating accounts for laundering funds.
Criminals obscure the origin of illicit money by transferring it through multiple mule accounts across different banks.
They also exploit cryptocurrencies to move funds globally, concealing transactions from authorities and making detection more challenging.
Mr Woods noted that the increase in money mule activity is closely tied to the rise in digital fraud, fuelled by the growth of instant payment applications such as BenefitPay in Bahrain.
“A fast-moving financial ecosystem, whether through online banking or shopping, creates opportunities for fraudsters to move funds quickly,” he said.
“It is challenging for financial institutions and authorities to identify money mules because criminals use various types to blend in.
“These include complicit mules, who knowingly open accounts to facilitate crime, and recruited mules, who hold legitimate accounts but are coerced or convinced to participate.
“There are also exploited mules, who are unaware they are being used or are victims of organised crime manipulation.”
In order to crack down on mules, he recommended that authorities in Bahrain and the GCC leverage advanced technologies like digital identity solutions and behavioural intelligence to detect manipulation patterns and account misuse.
Data, technology and analytics can help by identifying connections between bad actors and trusted accounts, enabling real-time detection of mule networks.
“Bahraini banks should monitor key indicators to identify potential money mule activity, account age, transactional history sudden or unusual changes in behaviour.
“They should also assess the risk profiles of other accounts it has transacted with, as mule accounts often interact with high-risk or suspicious accounts.”
Mr Woods highlighted the importance of using modern technology to combat scams, including artificial intelligence (AI) to safeguard money and combat fraud. “It is important for banks in the region to implement software that analyses digital identities and behavioural patterns,” he said.
“These tools provide real-time insights to distinguish between legitimate users and fraudsters. AI plays a crucial role in combating money mules by analysing vast amounts of data to detect suspicious activity.
“The best solutions use AI-driven models to process thousands of data points, generating single risk scores with detailed supporting data and fraud flags.
“These insights enable organisations using these tools to make informed decisions about customer transactions in real time.”
Finally, Mr Woods has some advice for people and businesses in Bahrain to protect themselves from scammers.
“Safeguard your data by using strong passwords and enabling two-factor authentication,” he recommends.
“If something feels off, take a moment to assess the situation, even if the request is put to you as urgent, stop and verify. “Finally, verify the person you are talking to is really who they say they are.”
nader@gdnmedia.bh
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