A money mule is a kind of money laundering method that has been applied for years. Even if money mules are not directly involved in money-producing crimes, they are considered complicit partners. That's why money mules are crime and carry criminal risk, such as prison sentences.
What Are Money Mules?
Money mules are a method used to make it difficult to track money laundered by criminals. Money mules receive money from a third party in their bank accounts, then illegally transfer them to someone else and receive a fee in return. People can do this on purpose, but besides this, most people do this work without knowing that money is flowing. So money mules may not be aware that they are used for fraud. Criminals use money mules to support money laundering operations. Unfortunately, unknowingly, people with money mules carry money around the world and become members of a criminal organization by helping criminal organizations remain anonymous.
How Does The Money Mules Process?
Criminals often use money mules to wash the money they have laundered through drug trafficking, fraud, arms, and human trafficking. When criminals choose money mules, they choose innocent, inconspicuous, an account with no criminal record because these accounts are less likely to be caught. The money they choose is transferred from a mule account to a third-party bank account via bank transfer, and the money received is converted into cash. Finally, this money is transformed into a virtual currency like Bitcoin. As a result, with these complicated transactions, the police cannot trace the money laundered.
Who Is Being Targeted?
Criminals especially target young people when choosing money mules because young people can be more unconscious in this regard. Criminals pick up young people from social media, attracting them with sicknesses such as cheap money and easy money. Young people in need of money can fall into this trap so that criminals use their accounts as a mule. According to studies, most money mules are under the age of 21. Apart from students, some groups are targets for criminals. For example:
- Job seekers
- Those suffering memory loss
- Small business owners
- Those looking for a relationship
- New migrants
- Those who are in economic trouble
- People interested in games of chance
Criminals choose older people who are particularly retired from these groups because older people seem less suspicious. While older people are dealing with their illnesses, they may not be able to question the transactions related to their bank accounts and understand what is happening. As a result, the criminals take advantage of these people's weaknesses and associate these people with a crime by using them as money mules
How To Become A Money Mule?
Criminals often choose money mules from online dating sites, frequently used social media accounts, online business websites, and online advertisements. Criminals communicate with people by promising easy money via email or social media. In general, the accounts they communicate with seem reliable, so people do not understand that they are criminals. These criminals ask people to open a bank account so that they can transfer money from that account.
They are asked to transfer the money to the person they want, and a fee is paid in return. Suppose people find out that they have started a criminal activity. In that case, they should report the situation to the bank where they opened the account, cut off their communication with the criminals, and give the police with the evidence. If the money mules knowingly do this, they are considered guilty when caught, and criminal proceedings are initiated about them.
What Should Banks Do to Prevent Money Mules?
Banks may find it difficult to spot these crimes, as Money Mule accounts are often undoubtedly visible. When opening new accounts, banks first get to know their customers and determine the risks in advance. They can comply with Know Your Customer (KYC) procedures to do these things. Banks can scan the customer with the Customer Due Diligence and Enhanced Due Diligence applications, determine their risks, and take measures according to these risks.
At this point, it is not enough to determine the customer's risk, and the transactions must be scanned. For example, when suspicious activities such as sudden and large cash transfers to an account occur, banks should generate alerts that allow them to be quickly identified. Banks can perform these screening operations with AML Transaction Monitoring. Also, banks should screen their customers periodically, thereby identifying new risks that may occur.
What Are The Results of Money Mules?
Money Mules are potentially a crime as they are part of the money-laundering operation. Money mules can be prosecuted and imprisoned, the security of their money mules is compromised, and their personal identity information is in the hands of criminals. They may have to pay the money lost by the victims if money mules are caught. Besides, banks may not want to open an account or credit to these people again. In banks other than Money Mules, this can be adversely affected. Banks may subject to regulatory penalties if they are involved in the money laundering operation by the money mule, so banks must detect money mule accounts and prevent these transactions.
Furthermore, according to news, In September 2019, 3833 mules of money were identified in operation carried out by the Fifth European Money Mule Action (EMMA 5), 228 of these money mules were arrested. With this operation, more than 650 banks and other financial institutions prevented a total of 12.9 million losses and helped report 7520 fraudulent mule transactions.
Sanction Scanner's Solution for Money Mules Prevention
In financial institutions like banks, criminals use money mule accounts to carry out money laundering activities. Due to money mules, organizations may be subject to regulatory penalties and money laundering offenses. For this, financial institutions should not notice the money mule accounts and should prevent these accounts. When opening a new account in financial institutions, the customer has to be identified, and the risks have to be known in advance. Institutions can follow Know Your Customer (KYC) procedures to do these. Financial institutions can scan the customer, determine their risks, and take measures according to these risks with Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) applications.
With Sanction Scanner solutions, businesses can meet their global and local AML obligations. Organizations can determine customer risk levels with our AML screening service while opening a customer account for an accurate risk assessment. With our AML Name Screening Software, you can perform CDD and KYC operations in accordance with the obligations, so you can prevent these risks by being aware of possible risks. At the same time, the Sanction Scanner can provide a Transaction Monitoring service to your company in order to detect the transactions made by Money Mules accounts. With our AML Transaction Monitoring Software, banks can automatically detect high-risk and suspicious activities. This way, businesses can protect themselves from potential financial crime risks and legal penalties.