What Is a Money Mule Scam?

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6 May 2024

What Is a Money Mule Scam?

Occurring in increasingly innovative ways, money mule scams are when individuals help launder money at the direction of a criminal entity — often unwittingly.

By Cryptopedia Staff

Summary

Money mule scams utilize a “mule” to transfer funds on behalf of another party. This is achieved through a variety of methods: wire transfer, courier service, prepaid debit card, and even crypto transactions. While some knowingly participate in a money mule scheme for profit, others are tricked into engaging in this illicit activity. Popular social engineering techniques used to recruit money mules include fake job offers, promises of easy money, and romance scams. The consequences of acting as a money mule may include financial penalties and legal charges.

Money Mules Explained

A money mule is a person who engages in the transfer of stolen or illegally obtained money on behalf of a criminal enterprise to launder the funds. The mule is typically rewarded with a small percentage of the money they transfer. While some mules knowingly engage in this illicit activity, some money mules may not even be aware that they are breaking the law and could end up being prosecuted — or even incarcerated — for participating in financial crimes.
The perpetrators of crimes like malware hacks, phishing scams, human trafficking, and ransomware often use money mules to help launder the proceeds. Mules are also utilized in an effort to keep authorities off the tracks of the primary perpetrators by adding a layer of separation between criminals and their victims. This structure can make it more difficult for law enforcement agencies to track and trace the money trail of a crime, and aids in hiding the identity and location of the perpetrators from both victims and the authorities.

How Money Mule Schemes Move Money

Unlike in the movies, money mules rarely carry duffel bags of fiat cash across borders via land, sea, and air. There are many more popular methods — both digital and physical — through which criminals move funds. Some of these include:

Bank transfer or wire transfer
Cashier’s check
Prepaid debit or credit card
Courier service
Gift card
Cryptocurrency
Money remittance or money service business

Crypto Money Mules

Increasingly, criminal enterprises are coercing money mules into executing crypto transactions. This is because cryptocurrency can function as a more seamless transfer of funds than wire transfers or cashier’s checks. Crypto’s speed and efficiency can offer a faster payday for the recipient.

Profiles of Money Mules

According to the FBI, there are generally three types of money mules: those who are unaware they are part of a money mule scheme, those who are fully aware, and those who aren’t sure of what they are engaging in. Let’s explore these differences further:
Unwitting: These individuals are completely unaware of their role as a money mule. They may have answered a job solicitation or fallen victim to a romance scam. They may have falsely placed their trust in a person or job position and may be asked to accept — and then forward — money from someone they don’t know.
Complicit: These money mules are fully aware of the crimes in which they’re involved, and are actively participating for financial gain or out of duty to a criminal organization. They may travel between countries to open accounts and set up fraudulent shell companies. They may recruit entry-level participants for money mule scams, and may even advertise their services and prices to prospective clients.
Witting: This category represents a more ambiguous gray area. These individuals may have initially been unwitting as to the crime, but continued their activities despite serious red flags and obvious warning signs. They may have been warned by friends (or even bank personnel) that they were involved in something suspicious. They may now be motivated by the easy money or be unwilling to acknowledge that they were duped into doing something illegal.

Money Mule Recruitment Techniques

Perhaps the most common way to recruit an unwitting money mule is through a fake job offer that masquerades as legitimate employment for those looking for work, especially students. The advertisements tend to mention positions like payment agent, payment processor, money transfer specialist, local payment processor, or similar such job titles.
A key warning sign would be a prospective employer asking you to open a bank account in your name — or in the name of a company you form — to receive and send money. A legitimate company would not do this. It would use a banking, payment, or escrow service for the transference of funds — not a freelance employee. Other warning signs would include having no specific job description, being allowed to keep a portion of transferred funds, or requests to “process” a money transfer via another method such as through a remittance service.
Another common way of ensnaring a money mule is through a romance scam. In lieu of promises of an easy job with easy money, a romance scammer may target the heart — not the pocketbook — by offering promises of true love. Romance scammers may utilize online dating sites to attract victims. They have even been known to use demographic targeting, soliciting recent widowers and other groups they suspect may be particularly vulnerable to their deception and charm. As with employment offers, you should be incredibly wary if someone on an online dating site wants to use your bank account — for any reason. This is especially true if you’ve never met them in person and have only corresponded online.

Other Warning Signs and Money Mule Consequences

To reiterate: It is inadvisable to transfer money on behalf of anyone else via any means if it seems even remotely suspicious. It doesn’t matter if you transfer the money electronically, in person, or use a courier service; you could be looking at harsh financial penalties or stiff legal consequences. You should protect yourself by never giving out your financial details to someone you don’t trust, especially someone you’ve never met in person. You should also be wary of unsolicited messages that promise easy money for little-to-no effort.
The punishment for being a money mule varies by region and country, and you may still be penalized even if you are an unwitting accomplice. Some of the charges money mules have faced include:

Identity theft
Money laundering
Wire fraud
Bank fraud
Mail Fraud

Tips for Potential Money Mule Victims

If you suspect you’ve been duped into acting as an unwitting money mule, you may still be able to avoid legal repercussions. It is generally recommended that you:

Immediately stop corresponding — and stop transferring funds — with those giving you instructions.
Inform your bank — and any other service you used — of the suspect transactions.
Report these suspicious activities to law enforcement.
Keep any financial receipts, and save any contact information and relevant communications (emails, texts, etc.).