Preventing Money Mule activity is a historical issue for financial institutions, but presently the problem is spreading faster than ever for several reasons. The critical job-loss situation caused by COVID 19 and the increase of digital onboarding procedures implies new challenges to identity verification processes and security check procedures. Also, new payment schemes like instant payment reduce the time for anti-fraud checks before the cash-out, and untraceable payment schemes like cryptocurrency make it harder to trace money flow.
Money Mules usually transfer illegally obtained funds between banks, countries, currencies, or cryptocurrencies. Criminals recruit people as money mules to help launder proceeds derived from online scams and frauds or crimes like human trafficking and drug trafficking. Money mules add layers of distance between crime victims and criminals, making it harder for law enforcement to trace money trails accurately.
Money Mules represent a critical threat to banking institutions since they pose both compliance issues and significant reputational damage. Being involved in a money-laundering operation could affect new customer acquisition rates, undermine share values, and introduce unexpected costs.