APP fraud is a serious money laundering risk. Every fraudulent transaction fuels wider criminal enterprises, from drug trafficking to human exploitation. That puts AML compliance teams under pressure to detect, report, and prevent these scams before funds disappear into the financial system.

Monitoring systems must be adapted to detect the red flags of APP fraud: unusual payment patterns, rapid movement of funds, and suspiciously structured transactions. AML compliance technology and tools can help significantly, but human oversight remains essential. Compliance teams should be asking: Is this transaction in line with the customer’s normal behaviour? Is there evidence of a scam at play?

Customer due diligence (CDD) is another line of defence. Verifying identities, scrutinising the purpose of payments, and conducting enhanced checks on high-risk customers can help flag suspicious activity before money moves out. This means training frontline staff to recognise the signs of APP fraud, not just traditional money laundering techniques.

Banks and businesses need to work together. Information sharing between financial institutions can help track the movement of fraudulent funds and disrupt money mule networks. 

Regulators are also pushing for stronger protections so AML teams need to tighten their fraud prevention frameworks or risk both regulatory scrutiny and financial exposure.