Are the unemployed being abused for money laundering?

A study from the United Kingdom reveals that unemployed young people are increasingly being recruited as money mules. The results from the surveys coincide with our findings on the use of straw men for money laundering purposes in Norway. In our survey, we found that one in five were inclined to be straw men in a transaction. Banks must be aware of the potential risk of the use of straw men.



What is a money mule?

In the context of money laundering, a money mule refers to a person allowing their bank account to be misused as a temporary storage location for dirty money. The typical example is that the money mule accepts to receive money in their private bank account from strangers and then subsequently transfer the money from the account to one or several recipients. The money can be a transferred between private individuals or entities, or a mixture of both.


Banks are supposed to identify suspicious activity of fairly similar transactions through one or more bank accounts. It is not unusual that such transactions are carried out through the account of a customer that is not subject to enhanced customer due diligence measures. A purpose for criminals to use money mules is to hide the origin of the dirty money or the connection to the criminals.


What risk is the person being a money mule running?

The person operating as a money mule may become involved in money laundering as a criminal offense. There are several provisions in the Norwegian Penal Code that provide penalties for money laundering. The prosecutor does not have to prove that the person acting as a money mule knew that he or she received dirty money. It is sufficient for conviction if the prosecutor can prove that the person should have understood that a transaction may represent money laundering.


Banks are obligated to report suspicion of money laundering. This includes money mule transactions. Through reports sent by banks, the police are informed of the suspicion without the customer knowing that the police are notified.


Those who have aided in money laundering as money mules face the risk of being dragged into the investigation by the police, involving organised criminal network and criminal activity. Investigating money laundering cases are often time consuming and entail many negative consequences for the implicated, also for the people that claim they only had a peripheral role as a money launderer. Additionally, the participating money mules may face problems establishing customer relationships with other banks.


Who are being recruited as money mules?

A survey from the United Kingdom autumn 2020 shows that criminals are increasingly trying to recruit unemployed people as money mules during the pandemic.


Those being targeted are young and newly graduated persons struggling to find work. They are being offered easy money by carrying out tasks that are ostensibly legal, but which in reality entail that they are operating as money mules.


More than 42 000 cases about money mules were reported in the United Kingdom in 2019. In October 2020, there are reports about an increase in the number of persons under 18 years old that are being recruited with offers of making a quick buck in an easy way. They are for example being offered a profit in the shape of a set percentage of the amount they are transferring through their own account, or a regular payment for a set period of time. The money mules are recruited through for example Facebook, Twitter, Snapchat, Instagram or other platforms that young people use. In some cases, they are also encouraged to recruit other people.


The money mules can also be tricked into believing they have received a transfer to their own account by a mistake, and then subsequently get asked to pay back the amount to a different account. These transactions have in common that criminals are abusing other individuals to camouflage proceeds from illegal acts by using the bank account of a naïve helper.


Findings on the use of money mules are concurrent with the findings Opinion made when carrying out an assignment for the law firm Erling Grimstad and Inyett. Our survey showed that one in five were inclined to be a straw man. Statistically 200 000 Norwegians, where the biggest group were men between 30 and 35, were willing to be a straw man, even when knowing that the money originated from illegal acts. This seems to be a risk that is increasing for banks in their anti-money laundering work.


Increasing unemployment under the pandemic seems to make it easier for criminals to recruit young unemployed persons as money mules.

Kontakt oss

(+47) 997 97 542

hello@governance.no

Gaustadalléen 21,

0349 Oslo,

Norge

  • White LinkedIn Icon

© 2017-21 Advokatfirmaet Erling Grimstad AS