The Risk Manager, Fall 2016

The PenFed Credit Union in an alert it issued about money laundering described a Money Mule “as someone who transfers and launders money acquired illegally in the following manner: in person, through a courier service, or electronically (for example, by using your account with PenFed or another financial institution to transfer the funds) on behalf of others.  Money Mules are often recruited online in what they believe is a legitimate reason – unaware that the money is the product of a crime. The money is transferred from the Mule’s account to the scammer, typically in another country.”

The alert identified these risk of becoming a Money Mule:

• Potential criminal prosecution.
• Financial Loss: Mules are often found personally liable for repaying the losses.
• Loss of personal information and identity theft.
• Having financial accounts frozen by law enforcement during the investigation.

Warning signs are listed as:

• The proposition involves transferring money or merchandise.
• The offer originates from (or the recipient of the funds is in) another country.
• All communication and transactions are online; you have not personally met with anyone.
• The email address connected to the offer or solicitation is ‘unofficial.’ For example, the solicitor is using a generic Gmail, Hotmail, or Yahoo account.
• You are asked to wire money from your account to strangers.

Lawyers are ripe targets for money laundering scams because fraudsters know from Client Trust Account scams that lawyers are well situated to facilitate money transfers.  The twist for lawyers in this scam is that the certified check they receive, unlike the one in trust account scams, is not a forgery. The third party receives real money and the lawyer gets a real fee.  When the money laundering crime is discovered, the lawyer-Money Mule should expect no mercy from prosecutors.

* Source: PenFed Credit Union, “Money Mule scams are on the rise.”