The Use of Online Money Mules in Money Laundering Schemes

This past July, the FBI's Money Laundering, Forfeiture, and Bank Fraud Unit (MLFBU) released a publication entitled, “Money Mule Awareness,” in order to educate citizens about the increasingly common use of money mules in money laundering schemes.

What are Money Mules?

Money mules are people who move criminal proceeds for another individual for the purpose of laundering it. They typically receive a small amount of the funds moved as commission for their efforts. Although money mules were originally used to physically transfer money and other stolen merchandise, often across borders, much of this work is now accomplished quickly, easily, and inexpensively through electronic means, such as online bank transfers.

How are Money Mules Recruited?

Money mules are targeted by criminal organizations. The individuals targeted to work as money mules may be fully aware of the illegal nature of the activity or they may participate unknowingly. Many online scams target unsuspecting individuals who tend to be trusting, gullible, and vulnerable.

Innocent individuals are often recruited online for what they believe to be legitimate work and unwittingly transfer “dirty” funds through various accounts. Such job advertisements call for "money transfer agents," "payment processors," or similar titles, and the work is attractive because it doesn’t require specific expertise or credentials and can be done from home.

In other cases, individuals are targeted through dating or social networking websites where the criminal establishes a relationship of trust with the individual over time and then convinces the individual to use his or her personal bank account to receive, hold, and eventually transfer money under a host of false pretenses. In these cases, the targeted individuals tend to be recent divorcees, widows, or college students.

Other ways in which money mules are recruited include unsolicited email and on darknet forums. Those recruited through the darknet are, more often than not, complicit participants. In all of these cases, the true identity of the solicitor remains anonymous. Therefore, it is always the money mule who runs the highest risk of getting caught.

Consequences of Acting as a Money Mule

Whether done complicitly or unwittingly, acting as a money mule is a crime and individuals could be charged as part of a criminal money laundering conspiracy, as well as face a variety of other criminal charges, such as bank fraud, wire fraud, and aggravated identity theft, among others. This can result in jail time and steep fines. Other consequences could include negative credit ratings, personal liability, and a bar from opening future bank accounts, to name just a few.

Challenges Faced by Financial Institutions

Money mule activity can be difficult for financial institutions to detect and prevent because individuals acting as online money mules are often existing bank customers who use their own accounts. This means that they have already been screened and passed customer identification and verification procedures. Furthermore, such individuals are frequently regular folks whose profiles do not otherwise exhibit the typical “high risk” factors which would require the institution to conduct a higher level of scrutiny and monitoring. Therefore, unless personnel at financial institutions are well trained on the specific behavior and transactional activity of money mules, it is likely to go undetected. And the institutions that have the resources to invest in sophisticated transaction monitoring software need to ensure that their algorithms are programed to pick up the varied types of activity engaged in by money mules.

Consequences for Financial Institutions

Financial institutions have come under harsh regulatory scrutiny in recent years, with a particular focus on anti-money laundering compliance. Money mule schemes pose a significant risk and can result in various negative consequences, regardless of the type or size of the institution. The most common consequences include financial losses, regulatory fines, and reputational damage.

Final Thoughts

Aside from being used in furtherance of money laundering, online money mules are part of a larger cybercrime scheme used to defraud financial institutions and their customers. Therefore, financial institutions need to have solid anti-money laundering compliance programs, including know your customer policies and procedures, and robust transaction monitoring. Additionally, institutions should incorporate continuous training on fraud and cybercrime.

To download a PDF of the FBI's booklet, "Money Mule Awareness," including money mule indicators and tips on how to protect yourself, click here: money-mule-awareness-booklet-july-2019.pdf

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