Fraud & AML

Why Is Fraud & Anti-Money Laundering a Hot Topic?

Closeup of young male theift in sweatshirt with hood transfering money from bills of stolen creding cards

Ghost Brokering

One method of fraud that hits the sector hard is known as “Ghost Brokering”. This is when an international student, or parent, is approached (usually via social media/chat rooms, but sometimes also in-person) and offered a way to pay their tuition fees for a discounted rate (sometimes claiming a special arrangement with the institution). The unwitting student/parent transfers the discounted sum to the criminal, often upon ‘proof’ being provided that the fees have been paid to the institution using, usually, stolen card details or sometimes money mule accounts. 

This creates significant risk for institutions receiving the funds:

  • Significant effort may be required to detect and manage fraudulent payment receipts, which are the proceeds of crime, including reporting to the National Crime Agency (NCA) via Suspicious Activity Reports (SARs) and other authorities. Funds should not be used, or returned, without the NCA’s permission (typically via a Defence Against Money Laundering or DAML) to avoid potentially leaving your institution open to money laundering charges.

  • Students may find they can no longer fund their studies if the money they need is lost when they, their parents or other payers unwittingly give it to criminals offering a ‘payment service’. 

  • Depending on the circumstances, individual students, or even agents, may also be seen to be complicit in some elements of these fraudulent payment schemes, and this may also have a significant impact on their ability to continue their studies (e.g. if their visa is revoked), or on recruitment of international students through certain third parties.

What Are Money Mules & Why Are Students Being Targeted?

Students are being increasingly seen as ideal targets by criminals looking to recruit ‘money mules’. Their age and, especially for international students, the sums of money potentially flowing through their accounts, including to/from overseas, makes them ideal to funnel and help obfuscate the source of funds.

Students' bank accounts are used to hold illegal funds for a period of time, the student (or someone with access to their accounts) then withdraws those funds in cash, and/or disperses the funds to other money mule accounts. The student is left with a small proportion of the funds as ‘payment’ for the use of their account. International students are sometimes also encouraged to ‘sell’ their accounts to criminals when they leave the country.

Institutions have an opportunity to help educate their students to help them avoid potentially being recruited as ‘money mules’, as well as assisting those seeking help if they realise they have inadvertently fallen into this trap. By preventing, and assisting student ‘money mules’ it helps reduce the resources available to criminals to carry out fraud and money laundering activities (some of which will also directly affect institutions). 

The risks to individual students are significant, with far-reaching consequences on their education, future employability and financial options and, potentially, up to 14 years in prison if convicted of one or more money laundering offences.

We have also partnered with We Fight Fraud to launch a campaign to help universities and colleges protect their students. Centred around a bespoke episode of a crime drama series ‘Crooks’, and supported by digital resources, the campaign looks to educate and interact with students virtually and on-campus.

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Why Is Awareness of, & Action Upon, Fraud & Anti Money Laundering So Important?

Institutions have a moral and legal obligation to comply with money laundering legislation, which includes taking steps to identify and report suspected or known cases of money laundering (which can include the receipt of fraudulent transactions).

Universities should have robust fraud detection and anti money laundering procedures and processes in place, and should train staff on how to report suspicious payments regularly. They should also aim to educate their students about fraud to help prevent them from falling prey to criminals.

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For more information on how to manage your institution's fraud and AML risks please get in touch.

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