The FCA has shared its findings from its review of payment service and account providers’ use of the National Fraud Database (a cross-sector database hosted by Cifas) and a money mule account detection tool. The FCA found that only 37% of the nearly 200,000 money mules that 25 firms offboarded in 2022-3 were reported to the NFD. As well as the voluntary membership of Cifas some firms also use a money mule account detection tool that can trace the proceeds of fraud across FPS. The FCA is concerned that the NFD is not being used effectively and is hampering how it tracks mule activity.
The FCA’s review aimed to help it understand how firms use the NFD and detection tool. It covered multiple cases across 13 firms with multiple accounts suspected of money muling – and covered cases that were reported to the NFD and that weren’t. It found large differences in the proportion of cases that firms reported – ranging from 6-66%, but was encouraged to see the high standards of reports that were made and that most firms conducted an NFD check as part of their investigations of fraud cases. Other key findings included:
- that only one firm conducted realtime checks against the NFD post-onboarding, so all other firms would miss markers placed after that point;
- some firms were using the NFD for screening but were not making any reports themselves;
- some firms decided not to file details for reasons the FCA did not think were justified – the problem being that firms need to show each NFD submission meets a certain standard of proof which firms did not feel were easy to meet;
- firms often struggled to get the information they needed when they needed it and often therefore to show conclusively whether the customer did willingly participate in money mule activities;
- firms generally needed more information than merely being alerted by the money mule account detection tool to form a view on their suspicions;
- firms sometimes missed patterns of activity that could have enabled them to detect fraud earlier;
- firms could not always produce customer proof of identification or address easily – including because it was held by a third party; and
- there was, positively, a high level of SAR reporting to the NCA.