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Mobile financial services .typology (Hoaxes and scams (Red flags ( One…
Mobile financial services .typology
typology
Agent outliers
This typology relates to agents who exhibit a disparity between their business profile and the transactions undertaken. The key to identifying agent activity that is outside the normal ranges will be in the form of statistical analysis and transaction monitoring by the MNO.
The reason for the unusual behaviour could be legitimate (i.e. a particularly successful agent), or illegitimate (i.e. an agent having a link to an organised criminal group and using his operation to launder criminal proceeds via fictitious or complicit customers).
Example
An agent moves a large amount of funds and undertakes a high volume of transactions from a small rural location. The criminal activity behind this is a drug factory receiving payments for shipments.
Red flags
Unusual frequency of deposits and withdrawals linked to an agent.
Unusual frequency or value of transactions for the geographic location of an agent.
Discrepancies raised in compliance monitoring reviews (e.g. a sample of CDD undertaken by the agent indicating the use of false documents or data).
Review of due diligence on the agent owners indicating links to high-risk individuals (such as known criminals).
Unusual values of deposits and withdrawals linked to an agent.
Unusual profiles of customers who interact with the agent.
Unusual number of agents within hierarchy (i.e. if a super-agent or
aggregator model is used, the number of sub-agents is unusually high when compared with the normal range).
Hoaxes and scams
Fraudsters operate a range of hoaxes, schemes and scams designed to extract money from unwary victims. Many of the so called ‘advanced fee’ frauds rely on victims who are persuaded to part with their money up front on the promise of receiving a benefit that never materialises. By nature, m-FS enable fraudsters to access a victims’ funds in real time; as a result they are attractive to criminals.
Examples
In the lottery scam, a victim receives an unsolicited communication telling him he has won an international lottery, but, in order to receive his winnings, he must pay an administration fee or local taxes.
A fake job advert is posted in a newspaper, with a small application fee being charged for processing. In reality, no job exists and the fee is completely bogus.
Red flags
One receiving customer with multiple transactions from different sources.
Transactions undertaken at any time of day, often for small amounts.
Frequent withdrawals at one agent.
Peak and subsequent decline in transaction activity when the fraud/scam is .finally publicised.
Multiple accounts with common activity (e.g. the same value transactions) linked by the fraudster in order to bypass transaction limits.
Public official corruption
In countries with high levels of bribery and corruption, m-Payments can be used to pay and receive bribes. The bribes may be sent to a third party who will then withdraw the funds and return the cash to, for instance, a law enforcement official. Alternatively a corrupt politician could use m-Payments to pay bribes to a large number of potential voters in a geographically remote area.
Red flags
one customer receiving multiple transactions from different senders
receiving customer physically based along a main road, highway, airport .or other transport hub; in the example above, the MNO would detect a high level of transactions close to the main highway (police on the road colecting money via phone instad of cash example)
transactions for similar amounts (i.e. a standard ‘rate’ for the bribe is applied)
transactions generally within working hours
frequent, possibly daily withdrawals by the agent.
Corrupt politician scenario:
one customer sending the same payment to multiple recipients
transactions occurring in run-up to elections
account held by a PEP or linked party.
Drugs trade
The m-FS sector is attractive to low-level drug dealers such as those engaged in the distribution and supply chain, as it provides a secure method of transferring funds in speedy fashion. In the often violent and competitive world of illegal drug supply, the benefits of not having to carry large amounts of cash are obvious.
Red flags
One customer receiving many transactions from different senders.
Amounts transferred generally in set amounts, representing the standard .street price for the drugs purchased.
Regular senders (perhaps those who are addicts making regular payment .for drugs)
A large number of transactions outside normal trading hours, or at a .particular time of the week (e.g. early Friday evening).
Frequent withdrawals by an agent and/or payments being sent on to a .‘boss’ higher up the drug-supply chain.
Transfers taking place in geographical locations with a known association .with the illegal drugs trade.
A set of linked accounts completing similar transactions.