By Richard Booth, Asia Pacific vice-president at BioCatch
While scam losses in Australia decreased by 18% in 2023, the total number of reported scam cases grew from 240,000 to 300,000. At BioCatch – the global leader in behavioural biometric intelligence – we’ve seen fraudsters armed with increasingly sophisticated, AI-powered toolkits continue to improve the quality and reach of their scams, automating parts of their attacks and utilizing both voice clones and deepfakes.
According to the Australian Competition and Consumer Commission (ACCC), scams cost Australians a staggering $2.74 billion in 2022, with more than 600,000 scam reports lodged. This represents an 18.5% increase in scam reports compared to 2021, despite last year’s decrease in scam losses.
BioCatch’s 2024 Digital Banking Fraud Trends in APAC report shows a decline in the number of Australian fraud cases involving malware or remote access tools (RATs) but also notes a concerning rise in the number of fraud cases involving at least one failed attempt to log into a victim’s account before said victim reports a scam. This suggests persistent scammers are making repeated attempts at attacking the same targets.
Perhaps even more concerning, the report shows scammers in the Asia-Pacific (APAC) region increasingly outsource the laundering of money stolen via scams to international syndicates that specialise in such activities. This trend is alarming for financial institutions in Australia and the region, as it makes it increasingly difficult to track and shut down money laundering operations.
There are a number of reasons why criminals are outsourcing the laundering process, including the reduction of overhead costs for the criminal organisation that is receiving the stolen funds, and that it adds another layer of professionalism and efficiency.
How criminals recruit money mules
Money mules own legitimate online banking accounts. Criminals pay those mules to receive and then transfer away funds said criminals have stolen via scams. The mule account serves as an intermediate stop between the victim’s bank account and the final account from which the scammer plans to withdraw their stolen money.
Criminals recruit money mules through a variety of methods, including job ads, social media posts, and phishing emails. They target vulnerable or financially distressed individuals, such as international students, often offering mule candidates a tiny percentage of the money they launder as payment for their services.
BioCatch’s report found many money laundering cases in the APAC region involved the use of mobile banking apps, which criminals target for their convenience. Mobile banking apps can be used to transfer money quickly and easily, which makes it difficult for law enforcement to track the movement of stolen funds.
The need for more information sharing
Financial institutions, governments, and law enforcement must do more to combat money laundering. Fraudsters work together in sophisticated syndicates, sharing information with rival criminals. To keep up, financial institutions must also communicate, sharing data among themselves and with regulators, law enforcement, and security venders. This allows good actors to maximise resources, identify emerging threats, and develop effective counterstrategies.
Unfortunately, right now a tangled spiderweb of varying laws and regulations around the world hinder effective information exchange. In a separate survey conducted by BioCatch, 88% of Australian fraud-fighting decision makers agreed that more information sharing between banks, regulators, and law enforcement is needed. BioCatch’s research found that 40% of fraud fighters work in siloed departments within their companies, highlighting a lack of internal collaboration.
As the volume and variety of scams escalate worldwide, fostering collaboration between financial institutions and governments is paramount. This international strategy would unite banks, businesses, and financial institutions.
Thanks to agencies like AUSTRAC, Australia is already taking steps in this direction, but citizen participation is also important. Public education campaigns can equip Australians with the knowledge they need to identify and report AI-powered scams, ultimately reducing the number of victims.
The role of behavioural biometrics in combating money laundering
Technology plays an important role in combating money laundering. With behavioural biometrics tools, financial institutions can analyse a user’s behavioural patterns during an online banking session in real time, monitoring their typing speed, mouse movements, hesitation and as many as 3,000 other indicators for deviations that might match known patterns of criminal activity.
A money mule might take longer to complete a laundering transaction due to unfamiliarity with the transfer process or the recipient account. They might exhibit signs of hesitation or confusion, use a new device, or log in from a location they normally don’t. Behavioural biometrics can flag all these anomalies.
It can also help to reduce the number of false positives triggered by traditional AML systems, allowing financial institutions to focus their resources on investigating truly suspicious activity.
Money laundering is a serious problem that costs financial institutions billions of dollars each year. It’s also a crime that can have a devastating impact on victims. By sharing information, implementing stronger AML controls, and using behavioural biometrics technology, financial institutions can help to combat money laundering, and protect their customers.
