Role of money mules in money laundering and financial crimes a discussion through case studies
| DOI | https://doi.org/10.1108/JFC-02-2020-0028 |
| Published date | 25 May 2020 |
| Date | 25 May 2020 |
| Pages | 911-931 |
| Author | Muhammad Subtain Raza,Qi Zhan,Sana Rubab |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Role of money mules in money
laundering and financial crimes
a discussion through case studies
Muhammad Subtain Raza
Department of Anti-Money Laundering,
Certified Anti-Money Laundering Specialist (CAMS), Pakistan
Qi Zhan
Zhongnan University of Economics and Law, Wuhan, China, and
Sana Rubab
FI Pakistan, Karachi, Pakistan
Abstract
Purpose –This paper aims to explain the role of money mules in moneylaundering and financial crimes
through the discussion of case studies. The authorsalso explain the red flags of money mules and provide
advice.
Design/methodology/approach –The authors use a case analysis approach. The paper mainly
discussesten cases about the use of money mules in financial crimes.
Findings –It has been found that money mules help criminal syndicates to remain anonymous while
moving funds around the world. Theunemployment, internet usage involvement of teenagers and youthin
money laundering-relatedcrime around the world are on a rising trend, and criminals are constantly looking
for their victimsby exploiting their mental and financial condition.
Originality/value –This paper provides case studies to understand the role of money mules in money
launderingand financial crime.
Keywords Case study, Money laundering, Financial crime, Money mule
Paper type Case study
1. Introduction
Money laundering is a complicatedactivity, in which the source and nature of dirty money
are disguised to make the money look lawful and then become usable, transferable and
negotiable. According to a recent study, only 1% of the $2.4tn laundered through
international financial systems is believed to be confiscated. According to another study
released by Thomson Reuters, the estimated cost of financial crime globally is $1.45tn –
3.5% of the turnover globally. Money laundering is a sort of criminal activity trying to
conceal the illegalityof proceeds of crime by disguisingthem as lawful earning. Owing to its
complexity, the methods of money laundering are variable. The complete process of it
consists of placement stage, layering stage and integration stage (Gilmore, 1995). Between
US$1.5tn and US$2.8tn or between 2% and 5% of GDP worldwide is lost annually through
This work is supported by National Social Science Foundation of China Project “Study on Regulation
Capture and Chinese Solution of International AML Regime from Global Governance Perspective”
(17BGJ020).
Role of money
mules in
money
laundering
911
Journalof Financial Crime
Vol.27 No. 3, 2020
pp. 911-931
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-02-2020-0028
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
money laundering. Money laundering, disguising the proceeds from criminal activity by
bringing them back into the legal financialcircuit, can take many forms.
2. Definition
2.1 Money muling
Money muling is a type of money laundering. A money mule is a person who receives
money from a third party in their bank account and then transfer it to some other personin
form of cash or any other kind after obtaining his commission.Even if money mules are not
directly involved in the crimes that generate the money (cybercrime, payment and online
fraud, drugs, human trafficking, etc.), they are accomplices, as they launder the proceeds of
such crimes. Money mules help criminal syndicates to remain anonymous while moving
funds around the world (EUROPOL-PublicAwareness and Prevention Guides, 2019).
2.2 Concept of straw man and money mule
A straw man is an individual whose identity is used by a criminal entity to commit illicit
acts (Nelen and Lankhorst, 2008;Shoverand Hochstetler, 2002). A money mule, on the other
hand, is an individual “who allows his or her bank account to be used to launder illegal
funds to criminals”(veiligbankieren.nl, 2014). Both of these definitions may be used
interchangeably as individual’s identity is used for illicit purposes in both scenarios;
however, throughoutthis research, the term money mule will be used.
3. Modus operandi in execution of money laundering
Money mules are facilitators for financial crime. The rudimentary relationship between a
money mule and a criminal entity is simply stated. The criminal entity needs the money
mule to launder money. A money mule is recruited through various methods; for example,
an e-mail, through online job search engines, face-to-face recruitment, school, social
networks and so forth. Once an individual is recruited as a money mule, the mule is then
asked to provide the contact person of the criminal organization with his or her personal
account information or ATM card with pin code. The manner in which a money mule is
recruited will determinewhich modus operandi a criminal organization will use to retain the
(illicit) funds. For example, if a mule was recruited face-to-face, the recruiter will ask the
mule for his or her ATM cardwith pin code –thereby gaining complete control of the mule’s
account. Once the illicit funds are transferred into the mule’s account, the recruiter
withdraws the funds from an ATM machine. Recruiterswho make withdrawals from mules’
accounts are also known as cashers (Mauritz,2014: Dutch Police Report; van der Wolf, 2014:
Dutch Police Report). After the illicit funds are withdrawn, recruiters vanish with the
money. Mules remain uncompensated and are ultimately left culpable for the fraudulent
charges when the withdrawn illicit funds are traced back to the money mule’s account and
thus the mule’s identity. Money mules used for these kinds of transactions are used
exclusively for their ATM card and pin code.Natural persons deposit considerable amounts
of foreign currency in cash to their foreign currency accounts held with different banks as
time deposit. The origin of funds cannot be established.The depositors are most frequently
young persons, and in most cases unemployed(Figure 1).
Money mules may transfers illegally acquired money electronically through bank
accounts, physical currency or assist the movement of money through a variety of other
methods. Once received,the mule will wire the money into a third party bank account; “cash
out”the money received, possibly via several cashier’s checks; convert the money into a
virtual currency; convert the money into a prepaid debit card; send the money through a
money service business; or conduct a combination of these actions (Figure 2). Money mules
JFC
27,3
912
To continue reading
Request your trial