Bank of Thailand intensifies crackdown on mule accounts

The Bank of Thailand (BoT) intensified efforts to crack down on mule bank accounts used for fraudulent financial activities by placing a freeze on any suspicious accounts, in a move to disrupt criminal operations.

Deputy Governor for Financial Institution Stability at the BoT, Ronnadol Numnonda revealed that last year, a decree on measures to prevent and suppress technological crime was enacted. One of its primary goals is to tackle mule accounts, which are exploited to receive and transfer money from illegal activities, thereby muddying the financial trail to obstruct law enforcement investigations.

As previous efforts faced difficulties, the BoT adopted a different approach to address mule accounts more stringently. They aim to help banks mitigate risks in countering online scams while minimising impacts on honest citizens. The enhanced anti-fraud measures include two main groups.

The first group targets the management of mule accounts. The approach will shift from an account-level to an individual-level action plan. This involves quicker and more intensive handling of suspicious accounts, both existing and new ones.

Banks will use information from three main sources: the Anti-Money Laundering Office (AMLO), the Central Fraud Registry (CFR) system, and the CFR database (grey mules), which lists individuals reported or involved in suspicious activities.

Such accounts will be immediately flagged as high-risk, and banks will have the capability to view these grey mule listings across different banks. Earlier this month, banks issued a circular to implement these measures.

Fight fire with fire

If a person’s name is flagged and found to be linked to criminal financial activities, all their accounts will be frozen, and barred from opening new accounts.

The Communications Department also stepped up efforts to tighten the opening of new accounts for high-risk individuals or those exhibiting abnormal behaviours, such as multiple small transactions within a short period followed by large transfers. Banks will assess customer risk from the aforementioned databases and take appropriate actions according to the risk level.

This could range from requiring additional documentation for verification to prohibiting online account openings, restricting mobile banking services, or outright denial of account openings across all channels.

The second group involves introducing additional products or services to enhance the security of customer transactions. Banks are required to offer services that make digital transactions safer.

Safety features include a transaction lock to prevent online transactions, making the unlocking process more difficult, and/or reducing the per-transaction limit for facial recognition transactions on mobile banking to below 50,000 baht.

Additionally, each bank can offer extra services to further protect customers, such as money transfers requiring approval of recipients, or transfers only to pre-specified recipients. These safety services are poised to be implemented in the fourth quarter of this year.

The Royal Thai Police reported that between March 1, 2022, and May 31, this year, financial fraud of all types amounted to over 63 billion baht, with investment scams accounting for the highest percentage at 36%, followed by money transfer fraud at 28%, reported KhaoSod.