“Money mules help criminals launder illicit proceeds derived from online scams, financial frauds, drug trafficking, or other crimes to make it harder for law enforcement to accurately trace. To be very clear, acting as a money mule is illegal.”
– Jeffrey Veltri, Special Agent in Charge, FBI Miami Field Office
Financial crime is serious business. Funds from fraud and other crimes such as human trafficking amount to trillions of dollars a year around the globe. At the intersection of these financial crimes, money mules launder the proceeds and pay the price for their actions while helping criminals escape scrutiny. Complicit or deceived, these individuals facilitate the flow of funds from the most heinous crimes imaginable.
The FBI has called money mule activity a financial crisis, along with 47% of anti-financial professionals who cited the crime as a threat of greatest concern in our recent survey. Year after year, the Department of Justice detects, disrupts and prosecutes networks of money mules ranging in size from hundreds to thousands of people. As discussed in our recent webinar, for financial institutions, effectively combating this crime is a regulatory imperative and essential to protect unwitting victims.
The Human Cost of Money Mule Activity
“The FBI and its partners will relentlessly pursue individuals looking to illegally move funds for illicit purposes.”
Michael Nordwall, Assistant Director, FBI Criminal Investigative Division
While money mules disguise the money trail, their own actions rarely evade the eyes of the law. In a recent initiative, U.S. law enforcement moved to stop thousands of money mules involved in transnational fraud schemes. This decisive action resulted in nearly 3,000 warning letters to unwitting money mules — everyday people who could face potential consequences.
Although mules are often victims of romance, employment or other fraud scams, their actions aid and abet criminal activity — and these tragic circumstances are no consolation to law enforcement. Mules can face prosecution and decades in prison in addition to the trauma, heartbreak and other emotional consequences of the scam they fell victim to. They may also experience challenges such as:
- Difficulty opening bank accounts
- Damage to credit scores
- Identity theft
- Threats of violence from criminals
Disrupting the Flow of Funds: A Regulatory Imperative
FinCEN’s AML/CFT priorities aim to protect the financial system from various illicit activities, including fraud schemes, drug trafficking, human trafficking, and terrorism. Money mules move and launder illicit funds from these crimes, making it crucial for financial institutions to detect and prevent such activities to comply with AML/CFT regulations. With an onus on financial institutions to demonstrate effective monitoring, having the right controls in place is essential to uncover money mules and the movement of illicit funds with precision.
Combating Money Mule Networks: The Role of Financial Institutions
Financial institutions are on the front lines of fighting financial crime, and money mule activity is no exception. Industry action is essential to protect others who could be recruited as mules and combat their activities that drive the world’s $3.1 trillion money laundering problem.
Innovation and collaboration are key. Targeted approaches to detection that use artificial intelligence and consortium insights help uncover predicate crimes associated with money laundering, offering low false positive rates, single-digit alert-to-case ratios, and low alert to SAR ratios.
A consortium approach to fraud detection allows your institution to consider the risk across an entire payment, including channels commonly exploited for mule activity such as wire, ACH and instant payments, to assess if a receiving account is a mule and stop the transaction in real-time. This approach can be made even more powerful with collaborative frameworks, which could alert your institution to known or suspected money mules after they are identified by other consortium members.
Additionally, information sharing is essential. To combat money mule activity more effectively, the financial industry must remain committed to sharing information under Section 314(b) of the USA PATRIOT Act. We cannot fight a challenge as sophisticated, widespread and deliberately coordinated as mule activity without working together and looking beyond our own four walls.
By embracing new solutions and working together, our industry can disrupt the money mules at the heart of the threat to our financial system and protect the vulnerable at the confluence of crime.
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