Banks Struggle to Combat Rising Mule Accounts

Australia's major banks face increasing challenges in addressing over 100,000 mule accounts that funnel illicit funds, including proceeds from scams. Despite significant investments in scam prevention, the big four banks—Commonwealth Bank, Westpac, NAB and ANZ—shut down just under 13,000 mule accounts in the last financial year, highlighting the difficulty in curbing this widespread issue.

Mule accounts, often set up for legitimate purposes but later repurposed for illegal activities, leave banks grappling to identify them. With hundreds of millions poured into measures like payment friction, crypto transfer limits, and name-matching technology, the progress has been limited. Mule-detection tools, such as ANZ’s detection model launched in 2023, have flagged few issues, with only 1,000 alerts detected so far.

The rise in mule accounts has broader implications for Australia’s financial system. Criminals exploit social media platforms to target vulnerable populations, including students and short-term visa holders, often offering as little as $200 to "rent" legitimate accounts. Others are unwittingly drawn in through manipulation and scams. Experts warn that as banks improve their scam detection methods, criminals are turning to less secure financial institutions and payment platforms, creating a constantly evolving threat landscape.

While banks like NAB led the charge in 2024 by closing 5,669 mule accounts, BioCatch, a fintech specialising in fraud detection, reported assisting banks across the Asia-Pacific region in shutting down over 150,000 laundering accounts in 2023. The big four banks collectively saw an increase in closures from 2023 to 2024, partly driven by reduced reliance on cryptocurrency exchanges as criminals pivot to exploiting Australian bank accounts.

Tackling mule accounts remains a complex challenge as financial institutions adapt their strategies amid evolving tactics by fraudsters. The broader financial ecosystem’s collaboration will be critical in reducing the risks posed by these accounts in the long term.

Source: The Australian, IT News, AM Intelligence, FST