South Africa’s Financial Intelligence Centre (FIC) recently investigated a number of South African bank accounts used as money mules to purchase and transfer Bitcoin.
A money mule is somebody who transfers money acquired illegally on behalf of others. Typically, the mule is paid for services with a small part of the money transferred.
They will usually be recruited by someone who does not have their own bank account, or who wishes to make a transaction invisible.
The FIC said that it received regulatory reports on deposits into the accounts of 21 individuals predominantly from low-income rural areas.
Its analysis revealed that the individuals had given their personal details to a money remittance syndicate, enabling it to open accounts with a cryptocurrency exchange.
“Over a period of four months the syndicate deposited R415 million into the 21 accounts held with the cryptocurrency exchange.
“The funds were exchanged for Bitcoin and a total of XBT3,081 was transferred to and withdrawn from Chinese cryptocurrency exchanges,” the FIC said.
Of note is that the accounts were being accessed from outside South Africa, predominantly from Hong Kong and Beijing, which was not possible as none of the implicated individuals had passports and therefore could not travel to these countries.
The FIC said it prepared financial intelligence reports and referred the matter to law enforcement agencies.
“The implicated individuals were referred to the South African Police Service and the SARB for contravening exchange control regulations, evading tax and money laundering,” it said.
Money muling has grown to such an extent that the South African Fraud Prevention Service (SAFPS) has opened a new category of fraud due to the increasing number of bank accounts that have been abused by third parties in this manner.
“While this may seem like quick money, it is not,” SAFPS said. “The danger for the consumer is that they are complicit in a criminal act and will be getting themselves involved with a fraudster.”
“It might look like easy money, but the victim has no idea what the money is being used for and it is often for illegal gains and even human trafficking.”
While recruiting is sometimes at street level in South Africa, in other parts of the world much of it is happening in cyber space.
The Australian Banking Association reported that Australian law enforcement and local banks generally saw two methods which criminals use to recruit unsuspecting innocent people in their illegal activities.
These are scams where fraudulent employment advertisements are posted online. Another method is emails that are sent to random addresses where you may be the recipient. This type of scam/email promises quick commissions in return for using the consumer’s bank account for receiving money and transferring it elsewhere on behalf of the fraudster.
The other method is romance scams. This is where vulnerable singles are targeted and asked to receive money and send it to a third party, taken in by the promise of a relationship. Criminals trawl online chat rooms, social networking sites, post hoax websites, or fake advertisements and fake profiles.