(Mexico) Lynx Tech, a technology company that uses artificial intelligence (AI) to detect and prevent fraud and financial crime, explains the importance of detecting “bank mules” in Latin America in response to the significant increase in money laundering activity from organized crime. and the use of sophisticated technology.
“Organized crime in Latin America is using increasingly sophisticated methods to launder money. One of the most common tactics used by criminal gangs is the use of “bank mules”, defined by HInterpolas people who knowingly or unknowingly help criminal organizations launder their profits by making it easier for their accounts to receive and transfer fraudulent funds in order to “legitimize” them. Thanks to advanced technology, financial institutions can identify and stop these activities, protecting both the organizations and their customers,” explains Juan Pablo Jimenez Isaza, Lynx Tech’s Sales Director for Latin America.
Financial institutions (FIs) in Latin America face increasing challenges in detecting and stopping illicit cash flows in real time, leading to financial losses and compliance risks. Criminal groups are increasingly using “bank mules” to launder illicit funds, taking advantage of advances in artificial intelligence and machine learning to evade detection. According to himNasdaq Verafin 2024 Global Financial Crime ReportBy 2023, an estimated $3.1 trillion in illicit funds flowed through the global financial system.
The rapid development of methods such as AI-based fraud, networks of fraudulent transaction movements and the use of false identities requires an equally advanced response from financial institutions to overcome challenges such as:
- Use of “bank mules”.Criminal groups use this method to move illicit funds in a way that is very difficult to detect without advanced technology. For example, they use multiple “bank mules” to transfer small amounts that go unnoticed by the systems.inheritance. However, supervised machine learning makes it possible to identify illicit sources of funds and “mule” accounts in real time, making it easier to detect these illegal activities.
- Automatic attacks.The use of machine learning by criminal groups increases the sophistication of attacks, making detection more difficult and enabling criminal activity to be leveraged. The ability to identify changes and constantly update new strategies is an additional challenge for financial institutions to ensure the highest accuracy and the least false positives.
- Authorized Payment Fraud (APPF).In this way, criminals convince victims to allow money transfers from their bank accounts to accounts controlled by the fraudsters. This type of fraud seriously affects FIs, causing significant economic losses and operational problems. Lynx applies a risk score to transactions based on their likelihood of being linked to illicit sources such as APPF. Additionally, it provides a 360-degree view of the customer and alerts people to additional activity who may be acting as “mules.”
In order to effectively respond to these challenges, financial institutions must consider advanced technological solutions against fraud and money laundering that allow for measures such as:
- Real time monitoring.Thanks to AI that can evaluate large amounts of data in a matter of milliseconds, it is possible to conduct a thorough review of each transaction in real time to identify suspicious patterns and fraudulent activities.
- Daily Adaptive Models (DAM).Machine learning (ML) enables continuous updates of the detection model to adapt to new methods used by criminals, guaranteeing accuracy and minimizing false positives. These models are constantly echoed by watch lists of various national and international organizations, as well as by suspicious activities detected over time.
- Automatic lock.By automatically detecting and blocking accounts identified as “mules”, the flow of illicit funds is stopped and financial institutions and their customers are protected. Similarly, it is possible to return fraudulent funds to their rightful owners, thus preventing the flow of money to criminals.
“The introduction of technologies capable of overcoming these challenges is a significant step forward in the fight against fraud and money laundering. By blocking mule accounts and returning fraudulent funds to their rightful owners, anti-fraud and money-laundering solutions like Lynx not only protect financial institutions, but also contribute to the region’s economic and social security,” concludes Juan Pablo Jimenez. Isazan.