The banking industry has introduced data-sharing through a new Central Fraud Register (CFR) system to intensify efforts to crack down on so-called mule accounts.
In collaboration with the Thai Bankers’ Association (TBA), the Bank of Thailand implemented data sharing under the TBA’s CFR system last month, aiming to prevent and combat financial fraud involving nominee deposit accounts, also known as mule accounts.
Since the introduction of the CFR system, the banking sector has identified 15,000 individual depositors linked to mule accounts. Every bank has established internal procedures to address fraudulent accounts, such as immediately closing such accounts and prohibiting depositors from reopening new accounts, according to a joint statement from the central bank and TBA.
Daranee Saeju, the central bank’s assistant governor for payment systems policy and the financial consumer protection group, said data-sharing under the CFR system enables banks to verify mule accounts, known as “grey mule accounts”, across the industry, supplementing the existing data-sharing system of the Anti-Money Laundering Office (AMLO), which refers to so-called “black mule accounts”.
According to Ms Daranee, 15,000 fraudulent depositors opened about 34,000 grey mule accounts. Depositors whose accounts are closed and who wish to open new ones must first obtain verification from the police. If approved, they can only open new deposit accounts at physical bank branches.
For black mule accounts under AMLO’s data-sharing system, the banking sector found 340,000 accounts belonging to 38,000 individual depositors as of August this year. Regulators have prohibited these depositors from reopening accounts for the next three years.
The central bank mandates that banks detect mule accounts as an internal practice, referred to as “brown mule accounts”, and handle them according to industry standards.
Regarding the central bank’s enforcement of facial recognition for money transfers via mobile banking apps for transactions of at least 50,000 baht, this measure has helped reduce the issue of one-time mule account usage. However, scammers have adapted their tactics by maintaining longer-term control over account owners and paying depositors monthly, Ms Daranee noted.
Additionally, Ms Daranee said the Bank of Thailand is collaborating with related regulatory agencies to consider amending existing rules to help fraud victims receive 100% compensation from banks. However, this process would take more time as the central bank carefully considers details concerning the banks’ responsibilities. Additionally, the central bank is studying similar enforcement measures in other countries.
For instance, Singaporean authorities require banks to fully compensate victims if the bank allows transfers to fraudulent accounts without alerting the account owner.
Furthermore, the Bank of Thailand requires banks to close any loopholes that could allow financial fraud, particularly through data-absorbing applications which are money-sucking apps.
If a bank fails to address these vulnerabilities, it may be required to fully compensate victims for their losses, Ms Daranee said.