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How to crack down on money mules

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By Andrew Clarke, MA FICA, 13 May 2024

Let’s start with a definition: according to UK Finance, a money mule is ‘someone who receives illicit money into their bank account and transfers it into another account’.[1] Notice the words ‘allow’ or permit’ do not appear. Often, but not always, the account holder is unaware of what is truly taking place.

According to the UK government, the scale of the problem is huge, with the National Crime Agency (NCA) estimating that over £10 billion is laundered via money mule activity in the UK annually.[2] In 2022, UK banks identified over 39,000 accounts demonstrating behaviour indicative of money mule activity.[3]

Katie Benson at the University of Manchester, in her excellent book Lawyers and the Proceeds of Crime, describes the various states of mind that can exist in those who facilitate money laundering, ranging from innocent involvement, unwitting, wilfully blind, through to the complicit.[4] The same principle can be applied to money mules. There are those who have been totally duped and believe they are acting legitimately with no cause for concern. There are those who think something might be a ‘bit dodgy’ but carry on regardless. Those who are sure they are doing wrong but nonetheless continue. And finally, those who actively seek to make money by allowing others to use their accounts.

Targeting students

Historically the money launderers focused on students, with posters advertising how to make money often placed on campus. Many universities became wise to this and banned them in student union bars, but they then began to appear on lampposts in walking routes popular with students.

The increased use of social media has given criminals an opportunity to target youngsters in a more direct and bespoke way. Banks became adept at spotting student mules with transaction monitoring systems alerting to unusual behaviour. Without stereotyping students, you would expect certain spending on an ‘average’ account, such as rent, living costs, study resources and the occasional bar or coffee shop. You would not expect £8,000 in from a third-party account and then £7,600 out in a series of transactions to other accounts.

And then along came COVID-19 and the standard profile began to change. Many people were now working from home, had reduced income and faced financial pressures. This provided an opportunity for money launderers to target them with fake online job adverts, often imaginative schemes such as acting for a charity or funding organisation that is dispersing support to those in need. Receive a lump sum into your account, send smaller amounts to the accounts we give you, and retain a commission for your trouble.

As a result, transaction monitoring with key typologies had to be expanded across all customer accounts to recognise potential mule activity. This coincided with the emergence of more sophisticated RegTech solutions, which supported monitoring. It will be interesting to see how increased use of AI will take this further.

So, how do we stop people becoming exploited as money mules? Make them aware!

Awareness campaign

The Don’t Be Fooled campaign is a partnership between UK Finance and CIFAS, which aims to inform students and young people about the dangers of giving out their bank details, and to deter them from becoming money mules.[5]

The consequences can be very serious. Depending on the level of involvement (that state of mind described above) a money mule may commit the criminal offence of money laundering, and face the legal repercussions. Of course it can also have a longer-term impact, by limiting future education and job opportunities, as well as making it difficult to access credit or loans.

In recognition of the scale of the issue – with around 23% of money mules under 21, and 65% under 30 – The Children’s Society’s new Financial Exploitation Lead, Katie Darlington, is also focusing on raising awareness amongst those well-placed to spot the warning signs. Announcing their crack down efforts, she said: ‘With expertise of frontline professionals such as teachers, youth workers and police officers alongside the knowledge of the bank sector, and most importantly by listening to children and young people themselves, our approach will make sure this work is driven by the insights and experiences of the young people most affected.’[6]

As financial crime professionals, we can continue to do our bit to help spot the red flags and the unusual transactions which could indicate that a vulnerable person is being used as a money mule, and to investigate further.

Don’t forget you can sign up to our dedicated ICA Certified Financial Crime Investigator course.