Criminals employ various methods to disguise the identity of their ill-gotten money. One method is to recruit ‘Money Mules’ to achieve their nefarious purpose. This essentially means conning people into lending their identity and bank account to route and transfer illegitimate money. Using people to transfer drugs or money has been a long-standing practice of the criminals. It is now on the rise and is being replicated in a high-tech crime environment.
SS Mundra, Deputy Governor of the Reserve Bank of India (RBI) in a recent speech mentioned that JanDhan accounts are vulnerable to being recruited as money mules. However, the problem is not limited to India. There is a consistent rise in money muling since 2012 and even Singapore, which ranks among the strictest and least corrupt countries in the world, has admitted to rising incidence of money muling.
Many people may unwittingly become money mules. Allow me to explain how this works.
A ‘money mule’ is someone who is recruited by criminals to launder funds fraudulently obtained funds. The term, "mule” actually comes from the narcotics trade. Here, an individual is paid a fee to transport illicit drugs. Such an individual is known as a drugs Mule. A money mule is slightly different in that there is no physical transportation of money it is through the mule’s bank accounts.
If ‘money makes the world go round (from Cabaret, the musical) then money mules are the vehicle used by economic criminals to make it happen. They are a necessary link for criminals but usually unrelated to the criminal activity that generate illicit funds. Their only utility is to transfer, and disguise the origins of illegal proceeds of crime by routing transactions through the bank accounts of mules.
How it operates
Money mules are usually people who are desperately looking for employment. Money mules can consciously choose to act as intermediaries with a view to earning money easily, but they are often unaware that they are being used. Criminals dupe innocent victims into laundering money by pretending to offer legitimate jobs via newspapers, chatrooms, job websites or ‘work-at-home advertisements’. They target vulnerable groups such as migrant workers or university students, who are tempted to earn some extra cash for receiving money from a victim’s account and transferring it to the criminal using a payment service. Sometimes, the money is transferred through multiple accounts and even countries to hide the trail. The mule is paid an attractive commission for the use of the account. Things get more dangerous when people are used to transfer funds for terrorist activity.
How customers should protect themselves
The websites of most banks have detailed warnings and guidlines for customers to follow so as not to get trapped as a money mule. Unfortunately, most people do not read.
Here are a few dos and don’ts to avoid these traps.
1. Do not respond to emails asking for bank account details.
2. Verify any company offering you a job and check if the phone number, email address and website are correct. Remember, some mules clone the websites or legitimate companies.
3. Be especially wary of job offers from people or companies that are overseas
4. Beware of a company asking you to carry out international financial transactions for them through your bank account.
5. Do not get carried away by attractive commissions for
consent to receive unauthorised money.
6. Infrom the bank if you notice any unauthorised transaction in your account
7. Be very cautious of unsolicited offers or opportunities to make easy money. Remember the saying…If something looks too good to be true, then it probably is not true.
8. Advertisements written in poor English with grammatical errors and spelling mistakes are usually a giveaway. Watch out for these.
9. Be careful of companies seeking ‘representatives’ or ‘agents’ to act on their behalf for a period of time, sometimes to avoid high transaction charges or local taxes.
10. Never give your bank account details to anyone, unless you know
and trust them.
Risks in being used as money mule
A criminal could be posing as an employer
Acting as a mule is illegal and ignorance is no defence.
“Money laundering consists of the conversion or TRANSFER of property …or of ASSISTING any person who is involved in the commission of the crime…”Money mule will be taken as a party to money laundering, as the money being transferred is stolen, and this is called money laundering, which is illegal. Involvement in money laundering is a criminal offence and will lead to imprisonment.
Consequences, when these money mules are caught
Their bank accounts get suspended/ frozen, causing inconvenience,
Potential financial loss,
Likely a long-term impact on credit scores.
Likely legal action for being part of a fraud, long litigation and even imprisonment if you are unable to prove innocence.
(SSA Zaidi is a retired banker and consultant for training and development. He is also author of Anti Money Laundering /Anti-Terrorism Financing & Know Your Customer