Money launderers and their accomplices are increasingly moving from current accounts to savings accounts in an effort to circumvent stringent bank checks imposed by APP reimbursement rules and AI-driven anti-fraud measures.
Reports indicate that the use of savings accounts for receiving fraudulent or disputed funds surged by 63% last year, whereas current accounts experienced a modest 12% increase. Overall, fraud filings related to this issue rose by 17%.
This data comes from Synectics’ National Sira database, which aggregates risk and fraud intelligence from over 150 UK entities, including Tier 1 banks, mid-sized institutions, and leading building societies.
While current accounts still experience the highest volume of fraudulent activity, the increase in savings account misuse suggests that money launderers are broadening their operations across various financial products. The findings indicate that fraudsters are not only sidestepping onboarding processes but are also adjusting their methods.
Liese Rushton, a fraud strategy consultant at Synectics, notes that “Post-PSR Mandatory Reimbursement, mules and their handlers faced a tactical tipping point. Understanding that account providers are likely to scrutinize transactions more closely across diverse products—many utilizing mule-specific AI algorithms—launderers are dispersing their activities.”
According to the report, ‘Misuse of facility,’ which encompasses all laundering-related offenses, remains the most prevalent fraud type in the UK, closely followed by identity fraud.
Identity fraud is currently identified as the primary growth area in fraud typologies within the UK. Factors contributing to this category include mismatched addresses, multiple applications from the same address, and the use of false identities, including suspected cases of artificially created synthetic identities.
Chris Lewis, head of solutions at Synectics, states, “There’s been a 25% increase in reports of ‘false identity,’ a growth likely linked to the rising use of AI tools by fraudsters—tools that simplify the creation of synthetic identities and the manipulation of legitimate ones. We anticipated the rise of synthetic IDs in 2023, and we are witnessing their widespread application today.”