Cybercriminals have benefited from the COVID-19 epidemic process. Criminals are known to use seemingly innocent accounts as money mules to launder money. Thereupon, Criminals took advantage of the epidemic and targeted people who were fired because of the epidemic to become money mules. Since money mules are one of the safest methods for money laundering, this new target audience has been a great opportunity for them.
By taking advantage of this situation, criminals can use the unemployed as money mules on the pretext of employment. People who are used as money mules may not even know about this situation. The COVID-19 period has become much easier and more active for criminals to find money mules, so financial institutions need to work more effectively in detecting money mules.
The Impact of COVID-19 on Money Mules
With the COVID-19 outbreak, many businesses became unable to do business, and many industries were badly affected. COVID-19 completely disrupted the demand for illegal drug trafficking and the ensuing money laundering measures. During the pandemic quarantine periods, millions of people were unemployed, and their savings were exhausted over time. As a result, an increase in layoffs and the ensuing unemployment can also lead to unprecedented criminal activity growth.
Criminals who benefit from increasing unemployment can use them as money mules by providing employment to these people. In these cases, it appears that most of the money mules are actually not aware of the situation. So what is the meaning of the money mule? Money mules are the name given to a method used by criminals to make it difficult to trace money laundering. Money mules take money from a third party and transfer this money illegally to another person and receive a fee in return. Some people have money mules even if they want to, and some people are not aware of their money mules. Unfortunately, people with money mules unwittingly carry money worldwide and become members of a criminal organization, helping criminal organizations remain anonymous.
Criminals often use money mules to wash money they launder through drug smuggling, fraud, corruption, arms, and human trafficking. Criminals especially choose innocent-looking accounts as money mules. The money transferred from the account of the money mule they chose is transferred to the third-party bank account, and the money received is converted into cash. Finally, this currency is converted into a virtual currency like Bitcoin. As a result, these complicated transactions make it very difficult for the police to trace the money laundering.
Who Are the Money Mules Targeted in COVID-19?
Criminals target young people, especially when choosing a money mule, because they may be less conscious about it or have more belief that they can make money easily. Young people who need the money and are unemployed during the COVID-19 period can fall into this trap, so criminals can use these people's accounts as mules. According to research, most money mules are under 21, but some people are also targeted as money mules. For example:
- Unemployed during COVID-19
- Job seekers
- Those in economic difficulties
- Small business owners (especially if their business has collapsed during the pandemic)
- Those who suffer from memory loss
- New immigrants
- Users interested in games of chance
To explain how to become a money mule: Criminals often choose money mules from frequently used social media accounts, online dating sites, online business websites, and online ads. Criminals contact their targeted people via email or social media, promising easy money. Generally, the accounts they choose to communicate with seem reliable, so people don't realize they are guilty. These criminals ask the people they contact to open a new bank account so that they can use these accounts for money transfers. Those who open the account are asked to transfer the money to the person they want, and a fee is paid in return. If someone with a money mule notices these transactions, they should report this to the bank. If money mules do their transactions on purpose, they are considered guilty and prosecuted when caught.
AML Compliance Challenges in COVID-19
Thousands of people are trading at banks or opening new accounts every day. Banks need to determine who actually opened accounts and whether their transactions are suspicious. Procedures for knowing and monitoring customers are also specified in global and local regulations. Therefore, banks should implement Know Your Customer (KYC), Transaction Monitoring procedures according to legal obligations. Applying these procedures may not solve the money mule problem 100 percent, so financial institutions should evaluate security vulnerabilities, increase awareness of crimes within the company, make a risk assessment, and a compliance program should be created to prevent money mules during the epidemic.
Banks can offer AI-supported AML solutions while creating this compliance program and easily comply with regulations. Sanction Scanner offers AML solutions in compliance with all regulations. With AML Name Screening, which is one of the basic requirements of a risk-based approach, you can find out if your customers are who they are actually talking to and learn about their risks. In addition, with Transaction Monitoring solutions, instant transactions of customers are checked, and the system generates alarms for suspicious transactions and can stop the transaction. With Know Your Customer, Customer Due Diligence(CDD), Transaction Monitoring, and Transaction Screening solutions, which are prepared in accordance with the AML Compliance program prepared by making a risk assessment in this way, money mules are very useful for financial institutions on the days when we are fighting this epidemic.