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Industry News

Risk Management Industry News for FCA Regulated Businesses

Blocking Access To The Money Mules

Posted by Serina Gill on 20-Jun-2018 14:46:38

banknotes-bills-cash-164652-311658-editedMoney mules are a growing problem and one of the fastest growing financial crime threats in the UK. Risk managers within retail banking, in particular, need to ensure they have robust systems in place to manage the problem.

Money mules are people who receive illegally obtained money into their bank accounts that has been transferred by a criminal, who is often overseas. Using a third party’s account breaks the audit trail, so allowing funds to be laundered, with the mule keeping a small percentage as payment. 

Last November, statistics from UK fraud prevention agency CIFAS showed a 75% rise in the number of 18-24 year olds who are allowing their bank accounts to be used to transfer the proceeds of crime. According to the figures, there were 8,652 cases of ‘misuse of facility’ cases between January and the end of September 2017. 

Education is key
Money mules are often people who need some extra cash, and could typically be the unemployed, students or employees looking to boost their earnings. Notably, there is a lack of awareness of the crime – or indeed the risks if someone is caught.

For example, Santander ran a spoof job advertisement that was shown to some 2,000 British adults. The role was for a fake company called Money Spark and was for a ‘Financial Transaction Control Analyst’. It involved the ‘receiving and processing of incoming cash funds’ and; ‘transferring of funds to accounts indicated by our managers’.

Although two thirds had suspicions, it was found that one in three of those seeing the job were interested, and said they would apply.

This suggests that there needs to be far more information about the risks and warnings that acting as a money mule could result in severe penalties, including up to 14 years in jail. It can also result in the person’s bank account being closed with resulting problems in accessing credit and ultimately being locked out of the financial system.

This work has already started, with CIFAS and trade association UK Finance running a campaign to explain what money mules are and the consequences of being apprehended, called ‘Don’t be fooled’ and it is also planning to reach children in secondary schools.

How mules are recruited
Money mules usually see jobs advertised online, often on social media, that promise money for little work. The  National Fraud Database has said that WhatsApp in particular has been used to lure in recruits. 

Those who agree to become mules can sometimes be coerced, or they may be naïve or indeed, others know full well what they are doing, but are willing to take a risk.

Strong controls are essential
Risk managers should ensure that the risk posed by mules is understood and that appropriate controls exist, including: 

  • Providing information to employees about mules and what type of individuals fit the profile.
  • Be aware that transfers may be small initially, but look out for those involving student or basic bank accounts and where monies are coming in from overseas.
  • For those with large numbers of student customers, consider providing them with guidance, including on the ‘Don’t be fooled’ campaign.
  • Are systems adequate for such regular monitoring or do they need to be upgraded?

Stopping money mules is also a focus in Europe and at the end of last year, Europol announced that some £27.22 million in illicit money transfers had been uncovered, along 159 arrests being made in less than a week, as part of a crackdown.

It said many of the transfers were being made in crypto currencies such as Bitcoin. European enforcement agencies have emphasised they will continue with coordinated campaigns against money mule operations, and will focus on targeting organisers and recruiters, as well as mules. 

Plenty of people are extremely cautious about providing their financial information, but others have no qualms about sharing data generally and if they are tempted to make some money, it is easy to see how they could be attracted to act as a mule. Now is the time to get the message that being a money mule is a route to potential disaster.

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