Following the Money: Preventing Money Mules & Laundering
July 7, 2022
Read an excerpt of our newest eBook, Following the Money: Preventing Money Mules & Laundering, below.
What is a Money Mule?
Though awareness of drug mules may be more common, they are not the only type of (human) mules exploited by crime syndicates. Whereas drug mules are individuals that illegally transport drugs across borders on behalf of—often coerced—others, money mules do the same but with money, typically receiving a commission.
Typically, an individual acting as a money mule will be directed to use either their own bank or cryptocurrency account or to open multiple new accounts in their own name and to then wire or transfer the given money to a designated third-party. The mules may also be directed to use gift cards, prepaid debit cards or money service businesses (MSBs) as part of the money moving process. Whether they know it or not, money mules are transferring stolen money made from or for funding drug trafficking, human trafficking, terrorist financing and online fraud and are likely also contributing to a larger-scale money laundering scheme, to say the least.
And, money mules pose a threat to businesses—especially banks and FIs—particularly when it comes to ensuring regulatory AML compliance.
Facing the Consequences
Criminals and organized crime rings are partial to the use of money mules because the process allows for a degree of separation between the fraudsters and the actual transferring of the money. The consequences and effects of money laundering and money mules are high, for both individuals that are mules and companies whose services are used as part of the money laundering scheme. Fraudsters are more likely to get away scot-free compared to the mules that are apprehended.
Types of Money Mule Scams
Just as there are numerous scams that are used by fraudsters to steal people’s personally identifiable information (PII), there are numerous scams that criminals will use to find people to exploit as money mules. Fraudsters are adept at targeting people in vulnerable positions. People of all ages, especially young people, are lured through online job postings, romance schemes, prizes, good-Samaritan schemes and on social media—and those are just some of the many ways criminals will attempt to manipulate people into laundering money on their behalf.
Detecting Money Mules
While effective identity proofing and Know Your Customer (KYC) tools are key for detecting suspicious activity and untrustworthy customers during onboarding, ensuring ongoing transaction and customer monitoring—throughout the customer life cycle—is also imperative for preventing money mules and laundering. Individuals may start as “good” customers but there is always the possibility that they’ll be exploited later in their customer journey, so monitoring changes in customer behavior and transactions is critical for anti-money laundering efforts.
A comprehensive and customizable platform that includes identity verification, transaction monitoring and automated KYC will be essential for businesses to effectively meet AML regulations, monitor transactions, manage fraud and fight money laundering.
To learn more about the different types of money mules, how businesses can detect and prevent money mules and to see 3 new infographics, read our newest eBook: Following the Money: Preventing Money Mules & Laundering.