Hogan Lovells contributes to report calling for greater industry collaboration to tackle money laundering

London, 26 September 2022 – Hogan Lovells, alongside organisations including NatWest, Mastercard, The Clearing House, McKinsey & Co and Featurespace, has contributed to a new report published by Payments 20 (P20). The report calls for collaborative action within the industry to tackle money laundering by collectively focusing on finding money mules and following the money. 

The report outlines the various types of money mules, identifies several key challenges in how they operate, and proposes recommendations for the payments industry to help reduce financial crime. 

The purpose of money laundering is to obfuscate the source, movement and destination of illicit funds produced through criminal activity which makes anti-money laundering (AML) and detection efforts inherently difficult. According to the UK’s Financial Conduct Authority (FCA), over US$40 billion dollars is laundered every week while only 1% of this figure is intercepted and seized. 

To help tackle money laundering, P20 provides the following recommendations: 

  • Prevent at the point of application – The most effective strategy is to identify and decline potential mules at the point of their application. 
  • Integrated approach to data – Create a holistic view of application and payments by combining any application data with several fraud detection practices including behavioural profiling, lifecycle scoring and retrospective profiling. 
  • Applying machine learning to AML – Contemporary data science methods including machine learning can be utilised to support AML efforts. Three of the most significant features are example importance, feature importance and counterfactual. 
  • Internal & external collaboration – Untangling complex criminal cases requires greater collaboration across internal functions and with external partners. 

Claire Lipworth, partner at Hogan Lovells, said: The cost of living crisis will create fertile ground for the recruitment of money mules. We welcome provisions in the Economic Crime & Corporate Transparency Bill designed to make it easier for firms to share information for the purposes of preventing and detecting money laundering and other economic crime. 

Duncan Sandys, Chief Executive Officer at P20, said: “The widespread reliance on money mules for money laundering gives banks and other payment service providers an opportunity to identify a variety of financial crimes. Finding the money mules and following the money can help fight fraud, identity theft and cybercrime, while preventing stolen money ending up in criminals’ hands. A focused, collaborative approach to money mules could not only address this crucial link in crime networks but could serve as a model for broader cross-discipline collaboration to fight financial crime.” 

Click here to read the full report. 

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