By Global RADAR
The term “money mule” is commonly seen and heard throughout the financial services sector, specifically in recent years as financial institutions and federal regulators alike have aimed to halt the seemingly endless trend that is money laundering. A money mule is defined as a person who transfers money acquired illegally in person, through a courier service, or electronically, on behalf of others. These individuals have become a significant tool for criminals to use in the process of cashing out on their potentially compromised bank accounts. In the past, these schemes have targeted unknowing participants with personal and/or financial issues, offering them seemingly legitimate employment opportunities for distinguished positions such as “money transfer agent” or “payment processing agent.” Another common strategy has been the work-from-home (WFH) schemes, which have been “used by fraudsters and mule herders to entice witting or unwitting individuals into providing bank account details for the purpose of receiving an Automated Clearing House (ACH) deposit or counterfeit check. They are then instructed to electronically transfer funds to a third party, often in another country”, through money-service businesses in the form of wire transfers (Charles, 2017). These often utilize job search websites, social networking sites, and automated emails, where WFH offers are disguised to appear as a job opportunity from a legitimate company. In many cases these schemes can be difficult to detect, especially when widely-recognized trademarks and logos are used to help create the illusion of legitimacy. While each of these stunts has had success in their own right in years past, the international public has in large part grown wary of the typical means by which financial criminals have targeted potential mules in the past. However, criminals have turned to a new, more sustainable method that has already seen great success in 2017, and could continue to grow in the years to come.
The money mule trend has re-emerged as a hot-button issue today, as new reports from prominent global law enforcement agencies have shown that children and young-adults have now become the primary targets of criminals looking to move their dirty money. The article “New data reveals stark increase in young people acting as ‘money mules’”, cited in BSA News Now on November 28th, discusses recently released data from the United Kingdom’s fraud prevention service, Cifas, tying the growth of bank account misuse to younger populations. According to the report, there has been a “75 per cent rise in the misuse of bank accounts by 18 to 24 year olds in the past year, with 8,652 cases seen between January and September 2017” as compared to the same period in 2016 (WBWire, 2017). The most common trend in the misuse pattern has seen these youths acting as the aforementioned “money mules” – allowing their bank account(s) to be used to facilitate the movement of illicit funds. Experts believe that this latest development has capitalized on young and relatively naïve individuals, including students, who often have little to no cash flow.
Cifas, working alongside Financial Fraud Action UK (FFA UK), has begun a campaign titled “Don’t Be Fooled” to both educate and discourage younger generations from engaging in activity of this nature. One of the tactics most commonly employed by criminals to exploit this specific demographic is similar to those that were previously discussed. In these new cases, criminals approach students and young-adults with “what looks like a genuine job offer, asking them to receive money into their bank account and transfer it onto someone else, while keeping some of the cash for themselves” (WBWire, 2017). This offer seems like easy money for unknowing youths, requiring them to do little more than visit their local money transfer agency or perform a few clicks of a mouse. However, the repercussions of this activity can be severe, and can impact the futures of the individuals involved for years to come.
Statistics have also shown that money mule fraud has increased profoundly over the past five years alone, as cases involving 18-24 year olds have nearly tripled since 2013. This trend represents a significant threat to the general public in the areas where these tactics are being used, as the proceeds of this form of financial crime are often used in drug and human trafficking, large-scale money laundering and terror financing. One of the key points Cifas and FFA UK have made in their attempts to deter youths from engaging in this activity through their campaign is informing them that if they act as money mules, either wittingly or unwittingly, they are essentially involved in money laundering, albeit often at a small scale. They have also made sure to highlight the fact that it is very likely that this activity will be discovered given the wealth of new, sophisticated regulatory technologies continuing to emerge throughout the financial sector. If unearthed, their financial accounts will undoubtedly be closed, sending them in a downward spiral where they will likely face difficulties in opening accounts elsewhere, while also potentially impacting their ability to “obtain student loans, mobile phone contracts or other financial products” (WBWire, 2017). The groups have also made sure to touch on the most frightening reality involved with being a money mule – that is, a person convicted of money laundering could face up to 14 years in prison.
While the opportunity for a quick and easy payout can be enticing for individuals of any age, the repercussions of such activity could be catastrophic. As part of the “Don’t Be Fooled” campaign, Cifas and FFA UK have published a list of ways to avoid becoming a money mule. The 5 simple steps go as follows:
- Do not give bank details to anyone you do not know or trust
- Be wary of job offers where all interactions and transactions are done online
- Be cautious of unsolicited offers of easy money
- Research any company that makes you a job offer
- Be wary of job offers written in poor English with grammatical errors or spelling mistakes
EURO CRACKDOWN LEADS TO MILLION DOLLAR RECOVERIES
The European law enforcement agency Europol recently had a successful crackdown on the “money mules” discussed in this week’s feature article. Europol reportedly “uncovered $36 million in illicit money transfers and made 159 arrests in less than a week” over the week of Thanksgiving, and found that “Around 90 percent of 1,719 illegal transactions identified during the short campaign were linked to cyber crime, with cryptocurrencies like Bitcoin playing an increasing role in money laundering schemes” (Rumney, 2017). The latest campaign is the third relatively recent effort by law enforcement agencies and banks to combat mule operations and money laundering in Europe, with these entities now beginning to target the organizers and recruiters of these ploys, making their efforts much more effective.
The overall number of money mule cases in Britain increased by nearly 50% overall between 2016 and 2017, making the need for group coordination and cross-border cooperation to hinder this activity vital for the well-being of the financial industry in Europe and across the globe. That collaboration was evident in this latest effort, as “law enforcement agencies from 26 countries spanning the European Union, eastern Europe and the United States participated in the Nov. 20-24 campaign, along with 257 banks and private-sector partners, Europol, judicial cooperation agency Eurojust and the European Banking Federation” (Rumney, 2017).
DOJ PROMOTING FOREIGN BRIBERY REPORTING PROGRAM
An under-the-radar program undertaken during the presidency of Barack Obama re-emerged on the national stage recently, as the U.S. Department of Justice (DOJ) recently announced its plans to continue its enhancement of international cooperation and financial security. Enacted in early-2016, this program was designed to “encourage companies to voluntarily disclose paying bribes to foreign officials”, and swore to reduce penalties to both domestic and foreign companies that disclose information of this variety and cooperate with the Justice Department. Earlier this week Deputy Attorney General Rod Rosenstein proclaimed that a revised version of the policy will be incorporated to make the legislation permanent, making the program yet another potent tool in the global fight against corporate crime.
The goal of the program is to aid in the enforcement of the Foreign Corrupt Practices Act (FCPA), which made it unlawful for certain individuals/entities to make payments to foreign government officials to assist in obtaining or retaining business. The incentive-based system has promised companies listed on U.S. stock exchanges the chance to receive a 50% reduction in fines if they meet the current self-disclosure guidelines for reporting. Enforcement of the FCPA is likely to receive a significant boost following the announcement, although the program has already been rather successful. The DOJ has indicated that “Since 2016, they have “obtained criminal resolutions in 17 corporate-related FCPA cases, resulting in penalties and forfeitures of $1.6 billion” (Farivar, 2017).
SCANDALS SETTING THE TONE FOR AUSTRALIAN BANKING REFORM
Unhappy with the recent string of scandals and crime seen across the Australian banking sector, Australia’s Prime Minister Malcolm Turnbull has called for a “wide-ranging” public inquiry to address the growing issue. In a formal address on the topic, Turnbull stated “the yearlong royal commission will examine the conduct of the nation’s banks, insurers, financial services providers and pension funds, and consider whether regulators have enough power to tackle misconduct” (Scott & Cadman, 2017). Although several of the country’s major banks had opposed an inquiry of this nature – due in large part to the potential ramifications that could ensue given the potential downturn of investor confidence – the banks eventually gave in in order to keep Australia’s sterling reputation as one of the world’s top financial systems intact.
Australia has been riddled with cases of AML law breaches and other improper financial activity in recent years. In fact, Australia’s four largest banks – Commonwealth Bank of Australia, Australia & New Zealand Banking Group Ltd., Westpac Banking Corp. and National Australia Bank Ltd – which are “responsible for 80 percent of the nation’s loans, have been hit by allegations they gave poor financial advice, failed to honor insurance claims, mistreated small business owners and that some attempted to manipulate benchmark interest rates” (Scott & Cadman, 2017). Although he had been criticized for his over-tolerance in regards to these rather serious issues, Turnbull hopes his latest efforts will further ensure that Australia’s “financial system is working efficiently and effectively” (Scott & Cadman, 2017).