A leading anti-money laundering (AML) organization has called for global action to disrupt the scam compounds responsible for a considerable volume of transnational fraud.

AML watchdog the Financial Action Task Force (FATF) warned in a new report that large physical scam compounds are a major driver of a global fraud economy estimated to be worth $500bn annually.

Often staffed by trafficked victims, 120,000 of whom are forced to carry out online scams in Myanmar alone, these operations are also supported by crypto and instant payment platforms, money mules, social media, messaging services and AI-enabled content, FATF said.

The trend is increasingly one of smaller and more mobile operations, with compounds created out of repurposed casinos, rented rooms, apartments, coffee shops and even moving vehicles, the report warned.

Read more on scam compounds: Scam Centers Expand Global Footprint with Trafficked Victims

The FATF report noted that countries are generally better at tackling scam compounds through downstream action such as asset tracing and targeting victim payments.

But it called on FATF member nations to combine these efforts with upstream disruption targeting things like fraudulent advertising, recruitment activity, malicious domains and suspicious phone numbers and telecom indicators,

“With criminals weaponizing AI and other technologies to intensify their scam operations, we need to urgently modernize and accelerate our response,” argued FATF president, Giles Thomson. “This means focusing on dismantling the criminal networks behind scam compounds, working proactively with technology, social media and communications sectors to prevent and disrupt more scams before they happen, and quicker intervention to freeze and seize the proceeds of scams once they’ve happened.”

Six Principles to Combat Illicit Money Flows

With this in mind, the FATF report promoted six pillars to its approach:

• Shift the focus from physical compounds to criminal leaders, recruiters and traffickers, and other supporting players
• Disrupt the infrastructure and services, including stopping, tracing, freezing and recovering victim payments
• Share information between financial institutions, technology companies, telcos and authorities
• Act at speed across borders, as the first 24-72 hours after a scam are critical for freezing funds and recovering assets
• Ensure investigations put the protection of trafficked and scam victims front and center
• Continuously update approaches as scam operations decentralize and adapt

Jonathan Frost, director of global advisory at BioCatch, welcomed the focus on compounds and the need for action by platform providers.

“Those platforms need to act on what they can already see. But when push comes to shove, banks are often the last and sometimes the only line of defense,” he added. “Funds can leave an account in minutes, and customers are often groomed into trusting the scammer over their bank. Banks must detect the manipulation itself, not just the transaction, and intervene before the money moves.”

A new CybSafe report published on November 6 found that over a fifth (22%) of Brits have received a scam call impersonating a familiar person’s voice or appearance. Over a third (36%) of these reports have led to their employer losing money or data.