Are the unemployed being abused for money laundering?

Research from the UK shows that unemployed young people are increasingly being recruited as money mules. The results from the investigations coincide with our findings about the use of straw men for money laundering purposes in Norway. In our survey, 1 in 5 answered that they were inclined to be straw men in a monetary transaction. Banks must therefore be aware of a potential increase in this phenomenon.

What is a money mule?

In the context of money laundering, a mule is often referred to as a person who allows his account to be used as a temporary storage place for other people's money. The typical example is that the money mule accepts to receive money in his private bank account and then sends the corresponding amount or another amount on to another recipient. However, it can also happen using the company's bank account. The variants of the way this is done are many.

A typical feature of what banks must identify as suspicious circumstances under the Money Laundering Act are roughly similar money transfers via one or more bank accounts. It is not unusual for such transactions to be carried out on the bank accounts of customers who are not classified with enhanced customer due diligence measures under the Money Laundering Act.

What risk does the money mule run?

Anyone who operates as a money mule can become involved in money laundering. There are a number of provisions in the Criminal Code that provide penalties for money laundering. For punishment, it is sufficient that the person who allows his bank account to be misused in this way has acted negligently. This means that the prosecution does not have to prove that the person concerned knew that he or she received black money. It is sufficient to prove that the person concerned should understand that the transaction via his own bank account may represent money laundering.

Banks have a duty to report suspicions of money laundering in the case of transactions that bear the clear stamp of being a mule transaction. Through reports sent from banks in accordance with the Money Laundering Act, the police are informed of the suspicion without the customer himself being aware that the police have been notified.

When the police investigate money-laundering cases, those who have assisted with money-laundering are often drawn into the investigation of the organized criminal network that has used the person in question for money-laundering. Investigating money-laundering cases is time-consuming and involves a number of negative consequences for those implicated, including those who themselves believe that they have only had a peripheral role as a money-launderer. Those who participate as money mules may also lose their customer relationship with the bank, have problems establishing customer relationships with other banks or be refused a loan/credit.

Who is being tried for office?

Research from the UK this autumn shows that criminals are increasingly trying to recruit the unemployed as money mules during the pandemic. The target group is young and newly qualified people who are struggling to find work. They are offered easy money by performing tasks that appear to be legal, but which in reality involve them operating as money mules. More than 42.000 cases of money mules were reported in the UK in 2019. In October 2020, an increase in the number of people under the age of 18 trying to be recruited with offers to make quick money in an easy way is reported. They are offered, for example, a profit in the form of a certain percentage of the amount they transfer via their own bank account or a fixed payment for a certain period. The money mules are recruited, for example, on Facebook, Twitter, Snapchat, Instagram or other platforms used by young people. In some cases, they are also encouraged to recruit others.

The money mules can also be "fooled" into thinking they have received a transfer to their own bank account by mistake and then be asked to repay the amount to another bank account. The procedures are many, but common to the transactions is that criminals abuse others to obtain camouflaged proceeds from criminal acts by using the bank accounts of naive accomplices.

Findings about the use of money mules coincide with the findings that Opinion made on behalf of Advokatfirmaet Erling Grimstad AS. Our survey showed that 1 in 5 was prone to being a straw man. Statistically, 200 Norwegians, with the largest group being men aged between 000-30, were also willing to be a straw man even if they knew the money came from illegal activities. This appears to be an increasing risk for banks in their efforts to prevent money laundering.

Rising unemployment during the pandemic probably makes it easier for criminals to recruit young unemployed people as money mules.