Money mules moving illicit proceeds from COVID-19-related crimes
Criminal networks put mules to work to complicate money trails during crisis
From economic stimulus payments to unemployment benefits, criminals are thriving on unparalleled opportunities for fraud during the COVID-19 crisis. With over 189M stolen through COVID-19-related fraud as of November 2020, criminals deploy a variety of tactics to disguise their illicit activity, including the use of money mules to launder funds from fraudulent schemes.
Money mules are individuals who transfer the profits of financial crimes on a fraudster’s behalf. The movement of these illicit funds, occurring through bank transfers and cash transactions, complicate and disguise the money trail, impeding law enforcement investigations. While some mules are complicit and financially desperate, others are unknowingly recruited through romance or employment scams and believe their actions are work-related or helping a loved one in need.
Once a money mule is recruited, the illicit funds are deposited into their bank account and instructions are provided on how the money should be moved. This often involves wiring the funds to a third account owned by another mule or under criminal control, where they are withdrawn or further circulated. By intersecting fraud schemes and money laundering activities, money mule activity complicates financial crime management.
Criminals Recruit Potential Mules Through Fraud Scams
As unemployment soars amidst the COVID-19 crisis, criminals are using work-from-home scams to target the growing number of Americans searching for income to recruit mules. These schemes are similar to employment scams — fraudsters advertise phony jobs, such as processing donations for COVID-19 relief, that actually involve laundering stolen funds.
Other criminals are capitalizing on loneliness during the pandemic, using romance scams to trick well-meaning victims into mule activities. While these interactions start innocently, they become financially and emotionally devastating as criminals escalate requests to open bank accounts and transfer funds.
Money Mules are a Tool for Criminal Networks
Money mules can be the bridge between seemingly isolated instances of COVID-19-related fraud and networks responsible for crime on a global scale. Transnational criminal organizations can use mules to move money across borders to obscure the source of funds. The U.S. Secret Service has identified a crime ring coordinating a massive scheme to defraud U.S. unemployment benefits programs with a substantial network of mules likely recruited through romance or employment scams.
Considerations for Financial Institutions
With COVID-19 creating historic opportunities for criminals to steal and launder funds through sophisticated mule schemes, financial institutions must have controls in place to protect themselves and their customers from the financial and reputational risks of illicit activity.
The Verafin Financial Crime Management platform offers a suite of solutions to efficiently and effectively fight financial crime. Verafin combats COVID-19-related fraud and money mule schemes with real-time fraud detection for mobile deposit scams and unusual incoming wires, performs targeted AML analysis to alert investigators to potential structuring activities, and facilitates collaborative investigations and information sharing to provide insight into mule activity spanning multiple institutions. Complicit or deceived, money mules are laundering funds for organized COVID-19-related crime. As the pandemic enhances opportunities for fraud and money laundering, financial institutions must act now to improve investigations and prevent losses.
Visit our Resource Center for the latest information on financial crime, including schemes exploiting the COVID-19 crisis, or register for an upcoming demo or webinar to learn how Verafin is responding to the unprecedented challenges facing the industry today.
