Effective use of money mules in the cyber attacks on banks

In the cyber attacks on the financial institutions, many a times money mules are used to transport the money to the mastermind of the operation

money mules

It was reported in the case of the cosmos bank investigation that a large number of account holders were used to withdraw money from the various ATM Centers in different cities across the world. A large number of participants involved in ATM withdrawals clearly indicate that they are not the mastermind of the fraud but are the Money Mules or the account holders who are paid small money to withdraw cash from ATM for a percentage cut.

They are people who serve as intermediaries for criminals and criminal organizations. Whether or not they are aware of it, they transport fraudulently gained money to fraudsters. The use of intermediaries makes it difficult to figure out the identity of the fraudster.

Once the fraud incident takes place, the fraudster needs the bank accounts to transfer the funds to either foreign countries or to cryptocurrency wallets. In certain cases, when the ATM centers spit the cash, these mules are asked to purchase the goods and are asked to Export the same to another country under the pretext of Exports.

Money mules, just like fraudsters, are guilty of illegally transporting fraudulently gained money and can be prosecuted for this.

In order to disguise the nature of the transaction, huge manpower is required to create the layers of the transactions, and recruitment of the money mules is one of the options.

Who are money mules?

Money mules are individuals who assist fraudsters in moving stolen money, either knowingly or unknowingly. Fraudsters typically use tactics such as phishing or social engineering to convince victims to provide their bank account details or open new accounts. The scammers then transfer stolen funds into these accounts and use money mules to withdraw the money or transfer it to other accounts, usually in different countries.

The promise of easy money may lure individuals into assisting in the movement of stolen funds, and they may be unaware of the criminal nature of their activities. However, acting as a money mule is illegal and can result in severe consequences, including criminal charges and imprisonment.

Migrants from the poor states, the unemployed, students, and people in economic hardship often feature amongst the money mules. Even though money mules are dragged into the scene, they are considered parties to crime as they launder the illicit proceeds of crime.
Criminals often dupe innocent victims into laundering money on their behalf with the promise of easy money by using seemingly legitimate job adverts, online posts, social media, and other methods. In India, unemployed migrants from small villages are lured for jobs to perform export operations.

How are money mules recruited?

Fraudsters recruit money mules using various tactics, including phishing emails, job advertisements, and social media messages. In some cases, the fraudsters may pose as legitimate companies or job recruiters. They offer the victims high-paying jobs that require them to receive and transfer money.
The scammers may also use social engineering tactics to build a relationship with the victim. Scammers convince them to provide their bank account details. Once the victim agrees to participate, the fraudsters will transfer stolen funds into their account. Later they instruct victims to withdraw the money or transfer it to other accounts.
In other cases, the fraudsters may use more forceful methods. They might threaten the victim with physical harm or blackmail them into participating. It is important to be cautious and vigilant to avoid falling victim to these schemes and to report any suspicious activity to the authorities.

How do money mules get caught?

Generally, banks have sophisticated systems in place to track fraudulent transactions and can identify these within short notice. Surveillance cameras at ATM centers capture their faces. Some mules use their true identity such as their KYC-verified bank accounts to transfer the funds to other countries. Law enforcement agencies can easily identify individuals and track down money mules by using their photographs and addresses.

Role of Law enforcement

Law enforcement agencies use various methods to catch them. One of the most common ways is through transaction monitoring. Banks and financial institutions flag suspicious transactions and report them to authorities.

They may also detect patterns in the behavior of the money mule, such as frequent cash withdrawals or international transfers. Law enforcement agencies may also conduct undercover operations to catch money mules. They pose as buyers of illegal goods or services.

Additionally, investigations into larger fraud schemes may lead to the identification and arrest of money mules involved in the operation. Once caught, money mules may face criminal charges and possible imprisonment. Knowingly or unknowingly assisting in the movement of stolen funds is illegal and can have serious consequences.

CA Mayur Joshi
CA Mayur Joshi is a Forensic Accounting evangelist in India. He is the co-founder of Indiaforensic and is author of 7 books on forensic accounting, fraud investigations and money laundering.