FDIC warns against “Money Mules”
By
The Federal Deposit Insurance Corporation (FDIC) broadcast a warning on
Friday to Chief Executive Officers of financial services companies with regard to
an increase in fraudulent work-at-home funds transfer agent schemes. Operators of the schemes are making active
use of an extensive knowledge of
The FDIC reports that criminals who gain illegal access to deposit accounts have been recruiting innocent third parties to act as “money mules.” In a money mule transaction an individual is recruited to receive and then transmit unauthorized EFTs from deposit accounts to individuals overseas.
According to the FDIC the following would be a typical scenario: “…the
criminal will originate unauthorized EFTs from a victim's account to a money
mule's deposit account. The money mule is then instructed to quickly withdraw
the funds and wire them overseas after deducting a "commission"
(commonly eight to ten percent).”
Financial institutions being targeted are those that offer corporate financial products that permit business customers to use the internet to originate EFTs including the Automated Clearing House (ACH) and wire transfers. A money mule, according to the FDIC, “…can be customers at any depository institution where EFTs can be received and funds withdrawn.” Also, one of the key requirements in the fraudulent transfer, is that the bank having the money mule account makes funds immediately available to its EFT recipient customers.
The following were outlined as the way typical money mules are recruited:
Online job posting Web sites are used by criminals to locate individuals seeking employment with flexible work hours that can be performed from home. These work-at-home schemes often involve written employment contracts, job descriptions and procedures to legitimize the scam.
Advance fee scams promising large monetary rewards for acting as a financial intermediary can entice individuals to participate in this activity.
Mystery shopping jobs may be used that require the employee to assess the performance of money service businesses by completing EFTs and then evaluating the service using customer satisfaction forms.
Social networking sites may be used to recruit individuals to act as money mules. Criminals conjure up various imaginative stories to befriend and persuade individuals to receive and forward stolen funds.
Some hesitant or skeptical money mules have been intimidated, harassed and threatened by their criminal "employers" to process the funds transfers quickly and with secrecy.
The personal identifiable information provided by the money mule might later be used to commit identity theft or account takeover.
The FDIC offered the following as examples of events that may indicate money market activity:
A deposit account opened with a minimal deposit soon followed by large EFT deposits.
Deposit customers who suddenly begin receiving and sending EFTs related to new employment, investments, business opportunities or acquaintances (especially opportunities found on the Internet).
A newly opened deposit account with an unusual amount of activity, such as account inquiries, or a large dollar amount or high number of incoming EFTs.
An account that receives incoming EFTs then shortly afterward originates outgoing wire transfers or cash withdrawals approximately eight to ten percent less than the incoming EFTs.
A foreign exchange student with a J-1 Visa and fraudulent passport opening a student account with a high volume of incoming/outgoing EFT activity.
Money mule schemes are another form of money laundering and come under the Bank Secrecy Acy and Money Laundering Regulations. Bank are always encouraged to have strong “know your customer” rules and procedures in place and should be updating them on a continual basis.
Financial institutions are encouraged to notify the FDIC’s Cyber-Fraud and
Financial Crimes Section in
.
© 2009 Timothy Holland First Published: 11/02/2009
Note:
Comments are welcome and may be sent to: Admin@tim-holland.com All comments will be attached to the original column for review and further comment by readers.
Reader Comments:
#1 | Matthew
Morgal on November 02 2009 15:00
Good to hear.
Hopefully this will force people to stay honest, and keep money where it
belongs. The occasional e-mails asking to assist in off-shore account transfers
and social networking messages asking for private information get annoying
fast.
#2 | jenncarpenter on
Hopefully this information will help
people become more aware of tricks and prevent more people from falling into a
trap.