Money Mules: Who Are They and How To Stop Them

Money Mules: Who Are They and How To Stop Them

Maruthi Kumar
Maruthi Kumar

January 2, 2024

Maruthi Kumar
Maruthi Kumar

November 1, 2022

Since time immemorial, mules have been used as a preferred mode of transport for goods. While their utility, over the years, has dwindled, the term is now used to refer to criminals who use humans to move stolen money across different accounts to cash out of fraudulent transactions. 

Who are Money Mules?

A money mule is someone who illegally transfers money on behalf of someone else. These accounts play a critical role in the fraud supply chain and the money laundering process. Syndicated crime rings usually pay mules a percentage of successfully transferred/laundered funds. Such funds are typically accrued via financial fraud or any other illicit activity.

Tracing Money Mule's Journey
Types of Mules

Unwitting money mule: Individuals that are unaware they are involved in criminal activity 

Witting money mule: Individuals that should be aware they are involved in suspicious activity but engage in it anyway, mostly for monetary benefits

Complicit money mule: Fully understand their role, working closely with criminal networks to plan and execute fraud

Irrespective of the actual MO, it is challenging to identify money mules during onboarding. It involves a genuine account and legitimate actions from account holders. Hence, KYC checks are rendered futile.

How do Money Mules Impact Your Business

Money Mule accounts can lead to a variety of adverse outcomes for financial organisations:

Money Mules And Their Impact

Identifying mules has become challenging, with the pandemic providing a solid impetus to digital banking. Crime rings have been employing the services of displaced workers while also abusing economic relief programs from a fraud perspective. All of this has led to steady growth in money mules’ activity since the beginning of the pandemic.

What are the Regulators doing about it?

RBI has directed banks to adopt a risk-based approach for KYC to minimise mule account frauds.

"Banks shall undertake diligence measures and meticulous monitoring to identify accounts, which are operated as Money Mules and take appropriate action, including reporting of suspicious transactions to FIU-IND," according to the amended Master Direction.

Tackling Money Mules with Bureau

Having the right checks in place enables businesses to combat money laundering and upgrade their anti-money laundering (AML) compliance efforts. Bureau’s end-to-end user onboarding and fraud prevention platform accurately and seamlessly verifies identities, reduces risk, and stops fraud while promoting compliance and growth, all in real-time. With the help of pre-integrated APIs that intelligently combine insights from hundreds of data sources, including device, identity, email, and biometrics, fraud detection becomes more manageable and accurate. Here's how Bureau tackles money mules.

Predicts, not just reacts: We identify suspicious patterns in user behaviour, device usage, and network connections, with a comprehensive fraud graph that helps pinpointing potential money mule activity in real-time before it escalates.

Paints a holistic picture of the customer journey - A rich tapestry of enriched insights, encompassing alternative data insights, device forensics & behavioural biometrics.

Protects your entire ecosystem: From onboarding to transaction, Bureau shields your institution at every juncture, ensuring robust security throughout the customer journey.

What To Watch Out For

Stop Mulling Over Mules

Money Mule has become a sophisticated crime ring with the advancement in technology. As a result, now it’s harder to track such illegal money transfers involving individuals, especially those who have verified payment accounts. They are classified as low-risk and aren't closely monitored which increases the chance of fraudulent transactions going undetected. Detecting mule accounts is a complex process as criminals employ various methods to launder stolen funds. However, bespoke solutions can enable financial organisations to:

  1. Disrupt criminal strategies with the effect that syndicated crime rings will learn to steer away quickly.
  2. Protect unwitting money mules’ accounts from financial/legal impact.
  3. Work with law enforcement to return stolen funds to fraud victims rather than allowing criminal profiteering to persist.

To know more about our solutions, reach out to us

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