The Daily Update: Crypto in the Classroom / Money Mules

An article in the FT a few days ago caught our eye here at SSC. It was titled Crypto in the classroom, a piece about how school children are trading crypto currencies. It is illegal for minors to trade cryptocurrencies; however, this makes no difference to the ease with which they are doing it. Many have persuaded parents or other adults, many of whom are not financially savvy, to set up accounts for them. Others buy the coin at ATMs or exchange Amazon gift cards for Bitcoin.

Along with the dangers of trading cryptocurrencies, the article also touched on how children are being duped into becoming money mules — allowing stolen money to wash through their bank accounts in return for a fee. Not something I’d ever heard of before. After a little research I’ve discovered it’s a widespread problem not just affecting school children. According to UK finance, the body representing 300 banks and finance firms, social media fraudsters recruit young people looking for work or money with offers of get-rich-quick schemes that involve them ‘loaning’ their bank accounts to the criminals so they can in turn launder money. More than 4 in 10 cases involve people aged between 21 and 30. Mule accounts play a critical role in the fraud supply chain infrastructure and the money laundering process.

The attraction to both the younger generation and the fraudsters is obvious. Rule of thumb it costs 40% to ‘wash’ dirty money. However, a 15-year-old school child would be more than happy to do the same for 10%. A win-win for both sides. Youngsters are repeatedly targeted by fraudsters looking for a ‘transfer agent’ or ‘local representative’ for an overseas company. Fraudsters, known as ‘herders’, recruit money mules, creating vast webs of linked online accounts. This enables stolen money to pass swiftly through multiple banks, often via different countries, before the criminals cash out the proceeds — making it virtually impossible to trace, all done within seconds on a banking app.

However, many youngsters are unaware of the devastating consequences that fraud can have on their future opportunities. The stolen money may have passed through a bank account in a matter of minutes, however, in the eyes of the law, it counts as money laundering — a criminal offence with a maximum sentence of 14 years.

Even though money mules are rarely involved in the underlying fraud, they are a vital part of the process — and the ones who carry the highest risk of being caught, as they use their own bank accounts. If banks suspect fraud, they can and most likely will freeze and close accounts without warning. Even if mules avoid a criminal conviction or fine, they could have trouble opening a bank account in future and may struggle to obtain credit including mobile phone contracts, credit cards or even a mortgage.

At the end of the FT article, the message is clear and to the point. Talk to children and younger relatives about the dangers of ‘muling’, the crimes it makes possible and what they should do if it happens to them. Yes, it might be a bit of an awkward conversation — but it will be far less awkward than seeing them end up with a criminal record.