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    • Dec 6, 2021
    • 6 min read

Executive Summary: MONEY MULES AND MONEY LAUNDERING

Sara Kulic, Emma Palmberg, Illicit Finance and Economic Threats Team

Week of Monday, December 6, 2021


Instagram mobile application[1]


Criminal actors increasingly use social media to recruit money mules, who transfer money using their bank accounts to a third party to launder criminal actors’ proceeds from illicit activities.[2] Criminals likely focus on recruiting vulnerable segments of the population who are likely unaware of the illicit nature of their role. Young and unemployed individuals, potentially aware of the criminal nature of their actions, are more likely to accept the financial benefit of acting as a money mule. The simplicity of this money laundering scheme is very likely to attract more criminal actors, including those engaged in terrorist financing. The use of money mules very likely impedes the detection of illicit financial transactions by providing an additional layer of protection to criminal actors.[3] Since the COVID-19 pandemic began, the use of money mules has increased and is very likely to continue to rise due to the new COVID-19 variant and related restrictions on a global level.[4] Despite global efforts to tackle this illicit financial activity, criminal actors are likely to exploit loosely regulated and harder-to-trace cryptocurrency transactions, continuing to pose a global financial threat.


A money mule is a person who, sometimes unaware of his or her role in the money-laundering scheme, receives and transfers illegally obtained money for a financial benefit, adding an extra layer of protection for criminals in the money laundering chain.[5] Criminals increasingly recruit money mules through fake job offers on social media sites such as Instagram, Facebook, TikTok, and Snapchat, often advertised as "money transfer agents", or opportunities to make quick money.[6] A potential lack of money mules’ awareness about the illicit nature of their activity likely makes the recruitment of money mules an attractive instrument for criminals looking to launder their illicit proceeds. The widespread use of social media likely allows criminals to recruit additional money mules while securing their anonymity through fake social media profiles. Fake social media profiles are very likely a reason behind difficulties identifying individuals recruiting money mules. The expedient process of creating a fake profile very likely increases the use of such schemes.


Potential recruits are individuals under 35 years old, including students, the unemployed, and recent immigrants.[7] For the first half of 2021, Cifas, the United Kingdom (UK) fraud protection body, reported a 78 percent increase in money mules under 21 years old compared to the first half of 2020.[8] Criminals are more likely to succeed in recruiting younger generations, as they are very likely unaware of their role in money laundering schemes. Younger generations very likely have no criminal record, which likely incentivizes criminals to recruit them as money mules. Due to the financial incentives, individuals facing economic hardship will likely agree to contribute to the money laundering scheme, despite their awareness of the crime. Those facing unemployment are very likely to accept money laundering schemes disguised as job offers more easily. If money laundering through money mules continues to increase, criminals will likely expand their recruitment pool to older or employed individuals to increase the capacity of their money-laundering operations.


Money mules receive illicit money to their bank account from a recruiter and transfer the money to another bank account, often in a different country, or convert the money and hand it to the third party in cash.[9] Often, criminal actors convert received money into a cryptocurrency, like Bitcoin.[10] By using the money mules’ identities for illicit transactions, criminal actors almost certainly circumvent anti-money laundering regulations. Due to the wide use of social media for recruitment, criminal actors very likely launder smaller, inconspicuous amounts of illicit proceeds through numerous bank accounts. As a result, financial institutions are very unlikely to detect suspicious activity. Also, smaller transactions are likely to be less suspicious to potential money mules, increasing the chances for their successful recruitment. Criminal actors will likely increasingly use cryptocurrency for money laundering activities, exploiting the lack of regulation and the limited traceability of crypto transactions. This almost certainly further challenges the detection and disruption of illicit financial flows.


Criminal actors often use money mule transactions to launder proceeds from cybercrime, drug trafficking, and human trafficking.[11] Criminals involved in various criminal activities are likely to increasingly use money mules as there is no need for more sophisticated money laundering schemes, such as opening shell companies. The relative simplicity of the scheme is likely to motivate criminal actors to increase their involvement in crimes to maximize the profit, which will be laundered this way. Due to the large recruitment pool and anonymity it provides, criminal actors are likely to increasingly opt for the use of money mules. Besides criminals, terrorist actors will likely exploit such schemes for terrorist financing activities. By circumventing anti-money laundering and countering terrorist financing regulation, illicit financial flows are very likely to increase, with a reduced likelihood of detection. HAEICHI-II, a recent INTERPOL operation targeting cyber-enabled financial crime, included a case of online fraud, where a Slovenian company was misled into transferring more than $800,000 USD to money mule accounts in China.[12] The case of the Slovenian company implies that malicious actors are likely to expand their recruitment pool and turn to more sophisticated scams targeting companies and increasing their money laundering capacities.


The current global economic crisis and high levels of unemployment caused by the COVID-19 pandemic have led to a significant increase in money mule schemes.[13] The mules have mainly been recruited through work from home scams and tricked into laundering illicit proceeds from COVID-19-related frauds.[14] With the new COVID-19 variant and resulting restrictions, the recruitment and use of money mules will likely increase. During the holiday season, individuals, particularly those facing economic hardships, are likely more vulnerable to recruitment. As COVID-19 restrictions are likely to expand, online shopping will almost certainly increase during the holiday period. As a result, online frauds will likely rise, incentivizing criminal actors to utilize money mules for fraudulent laundering proceeds.


In October 2021, Australian authorities disrupted one of Australia’s largest money-laundering rings, which allegedly laundered $62 million AUD by using 250 accounts from Chinese students who left Australia.[15] The seventh international anti-money-laundering operation, European Money Mule Action (EMMA), included 26 countries, Europol, Eurojust, INTERPOL, the European Banking Federation (EBF), and the FinTech FinCrime Exchange, and was concluded on November 30, 2021. The operation led to the identification of 18,351 money mules and 1,803 arrests.[16] Although the use of money mules is likely to increase, international cooperation between law enforcement, intelligence agencies, and financial institutions is likely to continue effectively tackling this threat. As a result, criminal actors are likely to take advantage of the increasing use of cryptocurrency among the global population. It is likely that criminals will attempt to launder money through money mules’ trading accounts or crypto wallets. The ability to launder large amounts of money through such a scheme will likely attract large organized criminal syndicates to utilize money mules. Lack of regulation and limited traceability of crypto transactions very likely make money mules agree to such schemes. Such money laundering schemes will likely grow in sophistication, impeding the detection of illicit crypto transactions.


The Counterterrorism Group (CTG) and the Illicit Finance and Economic Threats (IFET) Team will continue to monitor developments in the use of money mules for money laundering. The IFET Team will consult other regional teams to monitor the occurrence and developments of this threat and its implications in different geographical regions. The IFET Team will collaborate with the Counterintelligence and Cyber (CICYBER) Team to assess and monitor the use of cryptocurrency for money laundering. CTG’s Worldwide Analysis of Threats, Crime, and Hazards (W.A.T.C.H.) Officers and Threat Hunters will continue to monitor and provide relevant, up-to-date reports about this threat.


The Counterterrorism Group (CTG) is a subdivision of the global consulting firm Paladin 7. CTG has a developed business acumen that proactively identifies and counteracts the threat of terrorism through intelligence and investigative products. Business development resources can now be accessed via the Counter Threat Center (CTC), emerging Fall 2021. The CTG produces W.A.T.C.H resources using daily threat intelligence, also designed to complement CTG specialty reports which utilize analytical and scenario-based planning. Innovation must accommodate political, financial, and cyber threats to maintain a level of business continuity, regardless of unplanned incidents that may take critical systems offline. To find out more about our products and services visit us at counterterrorismgroup.com.

 

[4] Money Mules Moving Illicit Proceeds from COVID-19-Related Crimes, Verafin, June 2020, https://verafin.com/2020/06/money-mules-moving-illicit-proceeds-from-covid-19-related-crimes/

[6] 422 arrested and 4 031 money mules identified in global crackdown on money laundering, Europol, January 2021, https://www.europol.europa.eu/media-press/newsroom/news/422-arrested-and-4%C2%A0031-money-mules-identified-in-global-crackdown-money-laundering

[8] Data exclusively revealed on BBC’s Crimewatch Live shows 78% year-on-year increase in under 21s taking part in money mule activity, Cifas, September 2021, https://www.cifas.org.uk/newsroom/mules-six-months-2021

[10] The Change of Money Laundering in The Digital Age, Sanction Scanner, https://sanctionscanner.com/blog/the-change-of-money-laundering-in-the-digital-age-190

[12] More than 1,000 arrests and USD 27 million intercepted in massive financial crime crackdown, INTERPOL, November 2021, https://www.interpol.int/News-and-Events/News/2021/More-than-1-000-arrests-and-USD-27-million-intercepted-in-massive-financial-crime-crackdown

[13] Old Trick, New Victims: The Rise of Money Mules During the Pandemic, ACAM Today, August 2020, https://www.acamstoday.org/old-trick-new-victims-the-rise-of-money-mules-during-the-pandemic/

[14] Money Mules Moving Illicit Proceeds from COVID-19-Related Crimes, Verafin, June 2020, https://verafin.com/2020/06/money-mules-moving-illicit-proceeds-from-covid-19-related-crimes/

[15] Three face court after police smash multimillion-dollar money laundering ring, The Age, October 2021, https://www.theage.com.au/national/victoria/student-money-mules-police-smash-australia-s-biggest-money-laundering-ring-20211015-p5907i.html

[16] European Money Mule Action leads to 1 803 arrests, Europol, December 2021, https://www.europol.europa.eu/media-press/newsroom/news/european-money-mule-action-leads-to-1-803-arrests

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