Job Offer Turned Money Mule Scam: Watch the Red Flags!

You wouldn’t help criminals launder their money, would you? Unfortunately, about $1.35 billion of fraudulent proceeds coming from scams and illegal drugs is laundered through everyday New Zealand businesses, and even ordinary law-abiding citizens.

What about the latter? Yes, citizens that would never think of breaking the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) laws on purpose, could find themselves unwittingly helping criminals to do so.

Subsequently, the act of “accidentally” helping criminals could land them into legal trouble — and a permanent criminal record.

So, how could someone accidentally break the AML/CFT law?

In order to stay away from financial crimes, you must first understand how criminals generally try to hide their financial tracks from law enforcement.

How money laundering works with cash

According to the Ministry of Justice, money laundering is the process of “making the money look like it comes from a legitimate source”.

This involves making many layers of transactions to obfuscate the source, and putting a greater distance between the criminal organisation and their criminal proceedings.

Here’s a simple and over-generalised illustration of how money laundering could proceed.

Illegal businesses often transact in cash, which is undetectable by authorities, at least in small amounts. However, as cash proceeds become a literal mountain of dirty cash, this becomes a problem. 

If the organisation makes frequent large cash deposits to a bank, they could be questioned by the bank on the source of cash. So, they employ random strangers, known as money mules, to do that on their behalf — the more, the better it seems.

It’s far more difficult to detect small transfers from, say, 100 random accounts than it is to detect only a few but large transfers. The criminal organisation could then get away with their criminal acts and inflict further harm on society.

How money laundering works with crypto

Scams are also a form of financial crime. Due to the permissionless nature of cryptocurrency and its current limitations, scams involving crypto are far more common.

One such scam is the promise of earning more crypto upon sending crypto, under the guise of so-called “airdrops” and promotional campaigns.

On the blockchain network, crypto transactions can be seen by anyone. It’s possible for victims to report a scammer’s address so that businesses and exchanges could ban the address, preventing scammers from spending their illicit funds.

However, more sophisticated criminals could employ random strangers to, again, help them move their money and make it seem legitimate. 

Now, you may have heard of “coin tumblers” or “coin mixers”, which crypto criminals use to launder illicit crypto automatically and without hiring other users.

While such a technology had been used for that end, it’s becoming more difficult to do so after the U.S. government sanctioned a list of crypto wallets that have interacted with Tornado Cash and other tumblers or mixers.

Crypto-to-crypto money laundering has seen a decrease in the number of cases, but this does not mean that criminals have stopped using crypto as a tool to layer and obfuscate transactions.

This is where money mules come to play a key role. Criminals could either send cash or make bank transfers to money mules in order to buy crypto on their behalf.

In this scenario, illicit cash becomes crypto, but this time, it looks much cleaner because it’s more difficult to find a link between the illicit cash, the mule, the crypto, the exchange to cash it out, and the banked cash in a legitimate account.

Money mules, when caught, can face up to seven years in prison. If they’ve interacted with illicit funds or assets with a value of less than $500, they could be imprisoned for up to 3 months not to mention having a permanent criminal record.

How to avoid becoming a money mule?

Criminal organisations typically look for people who are more vulnerable — job seekers, online dating app users, international students (or students in general), new migrants, retirees, and persons suffering from memory loss. People who have been scammed before could also fall victim to money mule scams. 

Criminals use tactics that play on their victim’s desperations, greed, gullibility, and ignorance to get them to comply with the procedure.

Job seekers are especially prone to money mule scams. A desperate job seeker (or anyone who would “love to make a quick buck”) may do anything just to get paid.

Here’s a scenario where a criminal is targeting Alice, a job seeker. to transfer illicit funds for them:

Alice had just recently graduated, and decided to do some travelling before landing a corporate job. She’s looking for gigs to do online, where she could work remotely with flexible terms. On a website, she saw a vacancy:

Remote Accountant — No prior experience needed

Hourly rate: $50  

Want to get into the digital nomad life? Become a remote accountant for us with flexible working hours and other perks! We’ll accept anyone who is hardworking, creative, and flexible. No prior experience needed, because we’ll give you the relevant training regardless of your background.

Excited at the prospect of working and travelling, and the fact that they’d accept anyone from any background, she applied. It didn’t take long before she received a reply from the job poster. They’re interested in hiring her, after she reviewed her terms of employment. What a stroke of luck, she thought. 

Mike, the correspondent of her email, introduced himself as a leader in an organisation involved in several businesses, including property and banking. He’ll give her a bunch of PDFs and links to instructional videos and expects you to get ready by next week. 

Curious about the company and how easy it was to become accepted, Alice searched for the name of the business online. There was a one-page website with finance and legal keywords that she didn’t really understand.

Doesn’t matter, she thought, she’ll get paid in no time. Even so, she wasted no time learning all the “accounting materials”, as she didn’t want to disappoint Mike and lose her job.

On her first official day of work, Mike told her to do a bunch of checks on a financial statement attached as a spreadsheet. To her surprise, the task was easy. She just had to produce a few formulas to automate her calculations, and was done in 30 minutes. Mike wrote that he was impressed at the fast turnaround, and sent her $200 as her salary for four hours of work.

Alice wanted to do more for the business, and she requested to call Mike to get a quicker response. But Mike declined, telling her to wait for her next task in a few hours. Alice, keen on wanting to earn more per day, expressed her enthusiasm. Mike said he has a job for her the next day.

The next day comes, and that job is… to transfer $3000 that she’ll receive, to a specific bank account. She first questioned Mike why she had to use her own account, not the company account, which she thought was the “normal way”. Mike only replied that the company isn’t ready to trust her with the company account, but use this as a chance to earn their trust by “not running away with the money.. hahaha“. 

So, Alice did her “accounting work”, by taking care of the transfers. The amount got even bigger — $5000, $7000, $10000, and $20000. She was instructed to make the transfer once a day. Alice no longer questioned Mike nor the company, as she didn’t want to lose her job. But so far, she thought she was doing great work. She was even offered a 5% cut of every transaction as a bonus for her “hard work”, which she accepted.

After a month had passed, she received an email from her bank, telling her that her account had been suspended. Panicking, she emailed Mike about the situation, but she never got any more response from him. She was asked to come to the bank to answer some questions and have her account unfrozen.

After questioning, she realised that she’s unwittingly become a money mule for a drug trafficker. Her lawyer assured her that she’d be pardoned, for as long as she complies to the police’s request for information, and return all the money she’s gotten from her criminal employer, to prove that she was innocent and ignorant.

Ashamed of her previously gullible nature, she reflected on the red flags that she should have spotted:

• Getting the job was too easy. There was no interview process. It took her one email to become employed, and she never met the job poster.
• She didn’t question what the business does, and whether or not it really exists.
• Her correspondent never wanted to even meet her online.
• Even as an accountant, she was told to use her personal bank account to make businesses-related financial transactions.
• She was offered a cut of the transaction. This was never discussed in her terms of employment.

Don’t hide, report. 

It does take time for banks to detect suspicious transactions. However, if you’re in a similar situation, the right course of action is not to hide your involvement as an unwitting money mule.

Hiding could incriminate yourself, making it more difficult for your bank and law enforcement to believe that you were innocent. 

The best course of action is to talk to someone you trust. Easy Crypto has guided many victims of scams to take the right actions, and has worked together with law enforcement to keep New Zealand safe from financial crime and prosecuting innocent and unwitting money mules.

Further reading: Explore all things crypto security in our hub.