Let’s have a look at what money muling is

Money mule scam explained. Source: pexels.com

Victims or members of the gang? We’ll explain who money mules are and how not to become one.

What’s money muling?

Muling is also known as Squaring is a type of money laundering. Criminals obtain money in an illegal way. To make it look legitimate and cover their crime tracks, they need to transfer this money through third-party bank accounts. Often, the money needs to be transferred abroad. Criminals then trick other people, unaware of the transaction nature, to carry out a P2P payment for laundering purposes. Thus, a person defined as a “mule” becomes an intermediary in this peculiar money-laundering scheme.

The similarity with the mule’s work is that this intermediary does the heavy-lifting and faces many risks but rarely gets a reward. Moreover, just like pack animals, they shouldn’t necessarily know what they carry to perform a job. Many money mules have no idea what kind of scheme they are participating in. However, they still may get charged with a criminal offense.

How money mules get recruited

Criminals may openly approach prospective “mules” with an offer. Mules are supposed to get some easy cash after they receive money into their bank account and transfer it to another account. That is if the scheme isn’t discovered by law enforcement agencies. In this case, the account will be blocked. Yet, criminals don’t mention that fact, of course. They also don’t disclose the source or purpose of the money transfer. Sometimes, a mule is supposed to cash out the received amount of money and give it to someone in person. However, such laundering schemes are riskier and less frequent.

Younger adults are more susceptible to this kind of offer, looking for side jobs and seeking financial independence. They are also less experienced and more reckless than older generations. Many youngsters won’t ask about the transactions they make as long as they get paid for it. Therefore, Barclays’ research data shows that the number of youngsters being recruited to launder cash has more than tripled in the past three years. Students under 21 constitute almost one-third of all identified money mules. About 60-70% of the people involved in Squaring are aged 18-30.

However, the latest research carried out by Cifas, the UK’s leading fraud prevention service, in 2019 has revealed a 25% increase in money muling activity in those aged 41-50 and a 26% rise among those aged 51-60. It is possible since the middle-aged population and elderly people are increasingly using social networks and messengers.

Since not too many people would willingly agree to get involved in money laundering, criminals have developed a few common schemes to trick someone into illegal transactions. The most popular ones include:

Romance schemes – a criminal impersonates someone looking for a serious relationship either on a dating website or any other social network. They often prey on single middle-aged women from other countries. In other words, those who are lonely and may fall for charming foreigners.

Innocent communication quickly moves on to a romantic note, with the words “love of my life”, “soulmates”, and “marriage” coming up alarmingly soon. At the same time, the criminal starts confessing his sudden woes such as debts, pending eviction, sick family members, etc. Many of those sob stories involve an immigrant worker who needs some money to get back to their home country and is unbanked. Or else, as a striving entrepreneur, they may ask for help with their sales business.

Depending on the cover story, the criminal asks the victim to do them a favor:

• transfer a small sum of money to help him out;
• receive money, buy some devices, tech equipment, gift cards, etc. and send purchases back to your “soulmate”;
• open a separate business account or establish an LLC to receive money on the “fiancé’s” behalf;
• give your account number so that you can cash out a transfer from “a friend” and send the sum as a remittance;
• anything else that involves disclosing your bank details and transferring money.

Job advertisement schemes – mules are recruited with job ads for “payment processing agents”, “money transfer agents”, “local processors”, etc. The requirements are simple: a little spare time and a valid bank account. The job doesn’t need any special skills and can be done from home. All you need to do is accept payments and forward them.

This year, the FBI believes the general public is more prone to money mule schemes due to the surge in unemployment resulting from the COVID-19 pandemic. As many companies lay off workers or shut down completely, more “work from home” job opportunities are advertised even on reputable job sites. Thus, the Bureau started the ‘Don’t Be a Mule’ campaign to raise awareness about the issue.

Coronavirus schemes – in 2020, several fraudulent websites that recruit money mules in the name of helping Coronavirus victims were discovered. The fake nonprofits require new employees to collect and transmit donations for an international “Coronavirus Relief Fund.” To lull the victims into dropping their guard, the employer first asks to complete some meaningless, but busy tasks. For instance, go to the drug store and check the prices on masks and antiseptics. Only after a few errands, those who are really ready to work receive a task to process a “donation”.

The FBI also advises to look out for people who claim to be U.S. service members, U.S. citizens working abroad, or U.S. citizens quarantined abroad while asking you to perform some kind of monetary transaction.

Some stats

This year, law enforcement authorities from 26 countries and Europol announced the results of the annual European Money Mule Action ‘EMMA 6’. In the course of this operation, 4,031 money mules were identified alongside 227 money mule recruiters, and 422 individuals were arrested worldwide. Due to the assistance of financial institutions, 4,942 fraudulent money mule transactions were identified, preventing a total loss estimated at €33.5 million.

From 2015 to 2019 reports of fraud to the FBI’s Internet Crime Complaint Center (IC3) have more than tripled, going from $1.1 billion to $3.5 billion. Much of this reported fraud has been enabled by money mules. The leading areas for mule recruitment are the states of California, Florida, and Texas. In 2019, the FBI and its partners conducted a two-month-long national campaign that allowed to disrupt and prevent the illicit behavior of more than 600 money mules.

This year, the U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies announced the completion of the third annual Money Mule Initiative. The joint forces took action against over 2,300 money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud.

Consequences and precautions

When money mules get caught red-handed, they are investigated on the matter of their awareness. They may get arrested and go to jail for a term set by national legislation (up to 14 years in the UK). Even if the court decides a money mule was a victim rather than a partner in crime, a range of punishment measures may apply. Those include:

• Closure of their bank account,
• Damage to their credit history,
• Further inability to get a mobile phone contract,
• Fines and penalties.

Sometimes, an individual may get off with a warning. Yet, if they get caught squaring one more time, they’ll have no excuses. After all, whether aware or not money mules facilitate a range of horrible crimes such as drug sales, human trafficking, online fraud, and more.

In order not to become a part of the criminal scheme, mind these red flags:

• Do not accept job offers that ask you to use your own bank account to transfer their money.
• Remember that legitimate employers don’t ask you to form a company and open a new bank account for them.
• Beware of the individuals asking for your bank credentials, receiving and forwarding money, etc.
• Don’t get too attracted to offers of quick cash and easy money.
• Don’t agree to channel funds by a purported charity or a provider of PPE.
• Stay away from unknown social network contacts.
• If you discover a scammer, and they confess telling a sad story of why they got involved in the criminal activity, don’t send them money out of compassion. They may use your account, banking details for further money laundering.

If you suspect that you have got involved in a money mule scheme:

• Stop communicating with the suspected criminal(s).
• Stop transferring money or any other items of value immediately.
• Maintain any receipts, contact information, and relevant communications (emails, chats, text messages, etc).
• Notify your financial institution and/or the service you used to conduct the transaction.
• Notify law enforcement.

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