The Scam Economy Is Now Bigger Than the Drug Trade

The short answer: AUSTRAC chief executive Brendan Thomas told the Pacific Financial Intelligence Community that scam networks now cost the global economy more than the narcotics trade. The techniques are familiar, but the scale is new. Money mules remain the weak point criminals rely on, and Australian businesses control one decision: where their own payment goes.

Key takeaways

• The comments were reported by the Australian Financial Review from a meeting in Sydney.
• Investment scams, phishing and BEC are being run at greater scale, now AI-assisted.
• Checking who owns the receiving account is the decision a payer controls.
• For the fundamentals, see our guide to bank account ownership verification.

Intelligence agencies now calculate that the international scam economy is bigger than the illegal narcotics trade. That is the headline from a gathering of Pacific financial intelligence agencies in Sydney this week, reported by the Australian Financial Review.

The numbers behind the headline are global. The practical consequences are very local. If you run an accounts payable desk in Australia, you are exposed to the same techniques.

What did AUSTRAC say?

Brendan Thomas, the chief executive of Australia’s financial crimes regulator AUSTRAC, told the Pacific Financial Intelligence Community that scam networks cost the global economy more than the narcotics trade. He said they are rapidly moving into new regions, and that AI is a big reason why.

“The technology is allowing, particularly the scammers to do things faster and at a greater scale than they’ve been able to do in the past,” Thomas said.

He described criminal networks spreading across the Pacific, running “scam compounds” and money laundering ventures that funnel money between Australia, South America and the Middle East. The agencies at the meeting signed a new intelligence sharing deal with Nauru, as the rise in Pacific financial crime has heightened the need for information sharing.

It is worth being precise about the comparison. The claim is about the global scam economy against the global drug trade. For Australia, the ACCC estimates financial scams alone cost individuals a combined total of more than $2 billion per year, and that figure is for individuals.

Are the scams new, or just the scale?

Thomas was clear that the techniques are familiar. Investment scams, social media phishing and business email compromise are all being executed on a greater scale than before, because of AI.

That matches what we see in Australian payment fraud. Business email compromise losses reached $152.6 million in 2024, up 66 per cent on the year before, according to the AFP. The attack itself has not changed. A criminal gets into an email thread, or imitates a supplier closely enough, and asks for the bank details to be updated.

What AI changes is the cost of running that attack at volume. Fake invoices, cloned voices and convincing supplier emails used to take effort for each target. Now a network can run them at far greater scale.

Why are money mules the weak point?

The second half of the story is about where the money goes. Rajas Swarmy, the supervisor of the Nauru Financial Intelligence Unit and co-chair of the Pacific Financial Intelligence Community, said white-collar crime is recruiting local money mules in the region to traffic the proceeds of the drug trade. In his words, a mule “would collect funds from others and then move it across the jurisdiction and out of the area.”

Mules are also the mechanism at the end of a payment redirection scam. A business pays what it believes is a legitimate supplier invoice. The money lands in an account controlled by a mule, and is moved on.

Thomas made a related point about tracing the money. Most countries can trace funds to their own border, but once analysts from several countries put their data on the table, a collective picture of the flow forms. That is how investigators catch up after the fact. It is not how a business stops the payment in the first place.

What can your business control?

You cannot stop an offshore network from sending you a convincing email. You can control one decision. Where your payment goes.

Name matching helps, but Confirmation of Payee only checks that the name you typed matches the name the receiving bank holds for that account. It does not tell you who actually owns the account, whether the business behind it is real, or whether the person asking for the change is who they claim to be. A mule account can be set up in a name designed to pass.

Verification before payment closes that gap. Before money moves, check three things.

• The business is real and registered, with an active ABN that matches the name you are paying.
• The person asking for the payment or the change is who they say they are.
• The bank account belongs to that business, not just a similar name.

See our guide on verifying a supplier’s bank account in Australia for the practical steps, and bank account ownership verification for how ownership checks differ from name matching.

Before your next payment run, try our free fraud risk assessment. It takes a few minutes and shows where your process is exposed.

Related reading: ANZ Stopped $100M in Scams: Why Mule Accounts Still Win, AUSTRAC Warns AI Is Forging Identities: The Payee Check.

What is the short version?

Regulators across the region are sharing intelligence faster because the criminals are organised, well funded and now AI-assisted. Australian businesses sit at the receiving end of that scale. The sensible response is not to out-guess every email. It is to make sure that no payment leaves until the person, the business and the bank account have been verified.

ezyshield does that check live, before the payment, so a convincing story is never the only thing standing between your payment and the wrong account.

Frequently Asked Questions

Is the scam economy bigger than the drug trade?

AUSTRAC’s chief executive said scam networks now cost the global economy more than the narcotics trade.

Why do money mules matter?

Mule accounts are where stolen money lands before it is moved on, so they are a point where the flow of funds can be disrupted.

What can an Australian business do about global scam networks?

Control where your payment goes by verifying that the receiving account belongs to the intended payee before paying.