Money mules are “U.S.-based individuals who move funds from victims to other actors, often those who are involved in perpetrating the fraud.”¹ Many internationally based cybercrimes, including business email compromise (BEC) scams, require a mechanism to move ill-gotten gains back to the attacker’s home country. One of the easiest and most efficient ways to do this is by using money mules.

After receiving money acquired illegally, mules transfer it to others electronically or through a courier service. They may be paid for services with a small part of the money transferred, or they may be part of a larger network. The money is usually transferred from the first mule's account to that of another mule, with the funds ultimately going back to a criminal organization, typically in another country. If money mules are proven complicit in the predicate crime, they may be charged with violating a jurisdiction’s money laundering statutes.

Money mules are sometimes recruited online for what they think is legitimate employment, unaware that the money they transfer is the product of crime. Other times, scammers may appeal to victims’ emotional state by posing as caring, romantic individuals needing cash. The Better Business Bureau reported that money mule cases via this type of romance fraud resulted in nearly $1 billion in losses in the United States and Canada over three years.²

Since the U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and other federal law enforcement agencies launched an annual Money Mule Initiative in 2018,³ the public has become increasingly aware of this fraudulent scheme. The 2021 initiative resulted in over 4,000 persons receiving warning letters and recovered nearly $4 million of fraud proceeds.⁴ During the 2023 initiative, over 4,000 actions were taken against individuals.⁵

Although greater public awareness of money mules may help prevent this type of fraud, those investigating such crimes still feel dissatisfied with the current situation. With the help of select regional chapter presidents of the International Association of Financial Crimes Investigators (IAFCI), the authors sent an online survey to its members. Twenty-three investigators from law enforcement agencies and 18 from financial institutions in the United States described the prevalent techniques of mules, who may have been coached by their partners in crime, and the limited investigative tools available to prosecute the culprits or fully recover the monetary losses.

This article will summarize four common issues these investigators raised and then propose recommendations to improve the current system.

Issues

Warning Letters and Interviews

To prove money laundering, a prosecutor must establish that a defendant knew funds involved in a transaction represented the proceeds from unlawful activity. However, suppose an investigator cannot prove the elements of money laundering. In that case, the alternative is to serve a suspect with a warning letter, essentially putting them on notice that continued activity constitutes knowledge and is, therefore, prosecutable.

Despite warning letters being effective,⁶ their use is limited, with more than 60% of investigators indicating that they do not use this method to alert mules. Investigators who have sent warning letters to mules were unsure of their effectiveness as only one-quarter of them viewed the letters as a deterrent. However, as several investigators noted, documenting interactions with the mules is valuable regardless of the actual efficacy of the warning in discouraging future crimes. The investigators pointed out that mules had no excuses after being advised of legal consequences, giving law enforcement more legal options to thwart criminal activity.

Ninety percent of investigators have interviewed mules to ascertain the criminal nature of their activity and stop the money flow. Among investigators working in law enforcement, nearly 30% have seen mule activity cease, while 16% of their counterparts in financial institutions reported the same result. However, one-fifth of investigators in financial institutions have observed the continuation of mule activity after interviews.

As one of them explained:

Most are very well-coached by the fraudster and provide deceptive answers regarding the source of funds and where it is going. For example, instead of saying, “This wire is for my fiancée’s medical expenses,” they will say, “This is to pay a contractor who is doing home improvement projects for me.”

Another investigator lamented that mules refused to believe they were being scammed, even when told so by a law enforcement officer in uniform. The investigator attributed this disbelief to the fact that “criminals have way more time to spend with mules online or on the phone than bankers do, so they can be convinced easier by the criminals who have created some credibility with mules.”⁷

Expanding Methods

Ways of Payment

The investigators in the sample described various payment methods, ranging from gift cards, cash sent in magazines, and other innocuous items to cryptocurrency. Nearly half of the investigators cited romance scams as the most frequently observed tactic, followed by frauds related to job offers, the IRS, grandparents, the lottery, and others.

Regarding how the money was moved, investigators identified a variety of methods, including wire (37%); overseas transfers (30%); and P2P (person to person) options (17%), such as Zelle and Cash App, in addition to cash (24%) and checks (20%). Although relatively few investigators (15%) had observed cryptocurrency use by mules, they raised concern over increasing reliance on cryptocurrency and said they needed to be better equipped to investigate crimes utilizing this form of funds.⁸

Cryptocurrency

The use of mules to launder funds via cryptocurrency presents new challenges for both investigators and money launderers. Cryptocurrency transactions involve many service providers and transactional fees, and more transactions between mules mean significantly reduced illegal profits.

One simple and popular approach to maximizing illegal profits using cryptocurrency is through Bitcoin ATMs.⁹ Mules can deposit cash into a local Bitcoin ATM and designate it for any BTC (Bitcoin) address composed of letters and numbers that identify the intended wallet. The wallet can be located anywhere in the world and be cashed out at a foreign exchange. This method is reasonably straightforward for mules, and Bitcoin ATMs are plentiful in the United States and Canada. Moreover, the exposure to transactional fees is minimized, although many Bitcoin ATM providers charge high fees.

Another way mules can launder funds with cryptocurrency is through gift cards. While some Know Your Customer (KYC)-compliant cryptocurrency exchanges will convert gift card balances to cryptocurrency, several non-KYC-compliant websites will allow the exchange with little to no identity verification.¹⁰ Additionally, privacy-based wallet providers coupled with such websites can give money mules complete anonymity.

To achieve total anonymity, mules can use non-KYC-compliant exchanges to convert Bitcoin to and from other privacy-based coins, such as Monero.¹¹ An extensive list of such exchanges can be found on KYCnot.me, a website dedicated to listing P2P, centralized, and decentralized non-KYC-compliant exchanges. For example, mules could use a P2P app, LocalMonero.co, to purchase and sell Monero.¹²

Money mules’ use of cryptocurrency will likely grow further as popular P2P applications allow the purchase of popular cryptocurrencies on their platforms, along with the transfer of cryptocurrency to third-party wallets outside their respective networks.¹³ This ability, coupled with any methods of laundering cryptocurrency, can be complicated for law enforcement to investigate. Agencies must invest in blockchain analysis tools and form cohesive information-sharing systems to identify and seize suspect cryptocurrency addresses.

Information Sharing

Investigators from financial institutions indicated that a list of compromised accounts is shared among select banks or professional organizations. For example, the IAFCI members in industry groups can share details on criminal incidents at their place of business and ask for information about those involved.

This immediate dissemination and sharing of vital information might effectively identify compromised accounts and deter individuals from moving money. However, this information sharing is limited to select groups of investigators in certain regions, whereas money mules’ operations require interstate and international enforcement collaboration. Cooperation among financial institutions and local, state, and federal law enforcement agencies is critical to completing the investigation and mitigating the impact of money mule schemes.

Elderly Victims

Investigators noted that scammers were targeting older Americans with alarming frequency. Although this assessment may be only anecdotal in money mule cases, the FBI has reported that victims over age 60 have a higher monetary loss than any other age group,¹⁴ and they are also at greater risk of being financially exploited due to declining physical health, psychological well-being, and cognitive functioning.¹⁵ The most frequently mentioned tactic is grooming victims into believing they are needed or loved by the scammer.

Case Study

One investigator discovered a local postsecondary educational institution that predominantly enrolled foreign “students,” some suspected of mule activities. The investigator found that several individuals attending the institution came from a country commonly associated with a complex international money mule network.

Many of them took jobs as ride share app drivers and security guards despite supposedly being well educated in their country of origin, holding degrees in such fields as information technology and nursing. Each alleged student opened accounts concurrently with several banks and credit unions and received funds from confirmed BEC frauds. These funds were transferred through various parties via P2P apps throughout the United States.

The investigator leveraged his investigative contacts at several financial institutions nationwide and generated several search warrants for records. He discovered that stolen funds transferred throughout the mule network were ultimately used to purchase bulk food orders from a distributor in Africa and bulk orders for various goods in China via large wire transfers. Funds were also used to buy vehicles at auctions with cashier’s checks. The vehicles were transported to large U.S. ports and shipped overseas to a foreign jurisdiction. As a result, multiple money mule suspects were served with warning letters.

This case highlights the growing complexity of multijurisdictional money mule investigations. Information sharing among financial institutions and law enforcement agencies is essential to combat these criminal networks. Proper information sharing allows investigators to generate more efficient and targeted search warrants, especially at smaller banks and credit unions in different jurisdictions. Moreover, by establishing a system of reciprocity for search warrant domestication, state and local law enforcement investigators can expand their reach in money mule investigations more efficiently.

Recommendations

Money laundering schemes involving interstate and international jurisdictions that increasingly misuse technology, especially to commit crimes against older Americans, require elaborate investigations to minimize the financial impact and maximize legal authority to stem the trend.

Information Sharing

Financial crime investigators should consider a shared database. Consulting the National Consortium for Justice Information and Statistics, https://search.org, and its resources on data sharing might be worthwhile. Although a database of this magnitude would likely require a federal initiative and participation of federal infrastructure, pilot testing with jurisdictional data, while limiting access to a small set of known regional investigators, could provide insights to refine the database. Then, the initiative could expand to other jurisdictions.

Once the database has been set up, investigators and their supporting staff could register to become verified users and share ongoing investigation details. Unlike some databases restricted to law enforcement, a money mule database should be available to everyone involved in investigations. It might include detailed information about verified and suspected mules and their accounts, culprits’ names and known addresses, dates of interviews and warning letters served, and names of investigative agencies and investigators. Ideally, the database would offer real-time information on money trails to aid in what can be complex transnational money laundering investigations.

Partnerships

Most law enforcement agencies have no partnerships with financial institutions,¹⁶ and many elder-fraud cases require international connections, digital forensics, and cybercrime expertise.¹⁷ As the sample of investigators pointed out, mule cases are increasingly transnational, often testing jurisdictional boundaries and resources, including P2P apps and cryptocurrency. Investigators may consider participating in professional organizations for networking opportunities that could lead to future collaborations in money mule investigations.

Because older victims are targeted and often suffer greater monetary losses than those in other age groups, investigators might consider partnering with local adult protective agencies, social welfare agencies (such as public guardian and ombudsman offices), and victim advocacy groups to form and deploy an elder financial abuse multidisciplinary team (MDT) in their jurisdiction. Through consulting with the local AARP or Alzheimer’s Association chapters, investigators could include other professionals in the MDT, such as psychologists and financial advisors with expertise in elder care and finances.

Conclusion

The relatively minimal proceeds recovered by federal agencies’ annual money mule initiatives illustrate the importance of addressing this growing area of crime. A sample of experienced money mule investigators surveyed for this paper discussed the widening geographic scope of money laundering schemes and the limited or unsubstantiated impact of interviews and warning letters.

Criminals’ targeting and grooming of unsuspecting older Americans to move money in various ways and across different jurisdictions with the help of technology make money mule investigations in today’s terrain even more challenging. Investigators could benefit significantly from multilevel, multijurisdictional collaborations and partnerships that produce shared data and increased investigative capabilities sufficient to respond to the current technology climate and inform the public of evidence-based practices and policies.