Targeting the so-called money mules helping launder Scotland’s crime gangs’ dirty millions is a priority, according to the detective leading the fight against economic crime.
Online frauds such as vishing rely on individuals at the bottom of the ladder using their accounts to receive the funds and launder the proceeds of crime.
The money will often pass through up to 20 mule accounts in quick succession before it arrives back with the organised criminal who masterminded the scam.
The laundering process then continues with the purchase of high-value items such as jewellery, cars, electrical goods or even foreign currency.
Detective Inspector Graeme Everest, of Police Scotland’s organised crime and counter-terrorism unit, said online frauds would not exist if there was no such thing as money mules.
He said: “The money mules aren’t responsible for the original fraud but without having these individuals there to be used, the fraudsters would find it exceedingly difficult to commit the fraud.
“You are never going to see the criminal move the money from the victim’s bank account to his or her own bank account.
“Criminals are very resourceful and will look to see what they can use to their benefit.
“Our aim is to where possible catch individuals who are making life a misery for people in our society.
“Whether that be the bottom of the ladder, the mule, the mule herder, the fraudster, we want to tackle it at every level.”
Last week, Police Scotland arrested and charged 29 people – including nine teenagers – on suspicion of money laundering offences after an investigation into mules.
They were aged between 17 and 50, and some were suspected of channelling up to £20,000 through their accounts.
But the growth in online transactions to launder the proceeds of crime means that law enforcement would face a round-the-clock challenge in catching money mules.
A report released last month described targeting laundering as a game of “whack-a-mule”, as when one is closed down another springs up in its place.
Criminals are increasingly recruiting young people as mules by placing adverts on social media offering job opportunities or the chance to earn quick cash.
Every major bank and building society has at least one dedicated staff member tasked with trawling the internet rooting out adverts aimed at signing up mules.
Mules are also often only used once then dropped – but they could face long-lasting consequences if their bank account is closed down as they will then be unable to get credit or a mobile phone contract.
Money laundering also carries a maximum sentence of 14 years in prison and a criminal record hampers people’s ability to travel or get a job.
DI Everest said: “There are very, very few people who get a yacht and a holiday out of this and it won’t be a mule.
“What you tend to find is the individuals are used on one occasion because the banks usually shut the accounts then they become worthless to the organised criminal. By allowing your account to be used to launder the proceeds of crime you are opening yourself up to a criminal conviction.
“But the individuals behind them are also being targeted.
“We know we can’t arrest our way out of the issues but we can use other tools in relation to education.
“People are being arrested for these offences to try and deter other individuals.
“They should also know they may not be caught by police at the time. With a lot of these individuals it’s a number of months after the money has gone through their account.
“They need to think that it’s victims who have been duped. That can be anyone in society – young people, elderly people, people who are vulnerable and can be left with no money.
“This isn’t a victimless crime. Even if people are reimbursed they feel traumatised and they feel embarrassed that they have allowed themselves to be deceived.
“There will be a perception that it is victimless but the bottom line is that no matter where the money has come from it has not come from a bank, it’s coming from an individual or business.
“We’ve seen charities that have lost money because they have been duped – money meant for good charitable causes.
“We have seen small companies that have struggled to survive as a result.”
Last month the National Crime Agency – which works closely with Police Scotland – announced it was seeking to freeze and potentially seize £3.6 million in 95 bank accounts, most held by overseas students studying in the UK.
Foreign students can be seen as a prime target by criminals, particularly those looking to move money abroad.
Mules usually have a vulnerability, such as debts, that criminals exploit but they can also come from all walks of life.
The problem is growing and Santander has revealed it closes around 11,000 accounts a year after identifying them as being used by mules.
Police Scotland has written to the parents or guardians of every secondary school pupil warning them of the danger signs such as an increase in disposable income.
Cifas, the country’s leading fraud prevention service, and UK Finance, the trade association for the banking industry, are also running an awareness campaign called Don’t Be Fooled. The two organisations have also been working to encourage social media companies to act swiftly to remove posts aimed at recruiting money mules.
Simon Fell, director of external relations at Cifas, said: “Young people are increasingly being targeted on social media.
“The rise of ‘get rich quick’ schemes, fraudulent WhatsApp groups and more is reflected in the figures we see. For example, in the first nine months of 2018, we saw a 26% rise in the number of bank accounts bearing the hallmarks of money mule activity belonging to people under the age of 21.”
Banks have also reported a shift towards mules using their own long-term accounts rather than setting one up for the purposes of making illegal transactions.
Lloyds Banking Group found that only one in 50 mule accounts is set up using fake ID.
Fraudsters are also increasingly mimicking the habits of normal bank customers by making larger numbers of small transactions instead of single large transfers.
The money will then be moved quickly through 15 or 20 accounts.
UK Finance said: “There are a lot of mules. If the police were to go after every mule, they would do nothing else.
“This is where it’s so important for the industry to work together.
“While we will be identifying the money mules we will also be looking to identify those herders behind them.
“That is the big ticket piece.”
THE LAUNDRY: ‘We cleaned up more than £9m in three years. It wasn’t hard’
Banks did not ask enough questions when organised crime gangs used low-level mules to rinse millions of pounds of dirty cash, according to a former money launderer.
He told how gangsters would enlist people because of their drink, drug or gambling debts and instruct them to open bank accounts.
Dirty money would be deposited in cash then withdrawn an hour later from a different branch and handed back.
The mules would be paid a percentage of the cash or have it deducted from their debt if they owed money for drugs.
The money launderer – or mule herder – would have played no role in the crime generating the cash but would take a commission for cleaning it up.
He described how he oversaw the laundering of around £9.5 million in the Glasgow area over a period of three years.
But he said the detection technology now used by police and banks meant effective laundering had become challenging.
He added: “It would still be much easier to clean cash than to do it online. It leaves less of a trace.
“Frightening amounts were going through accounts back in the day. Hundreds of thousands of pounds spread between different accounts.But to do it these days is much riskier. You would want a much higher cut of the money being cleaned.”
No questions would be asked about the source of the cash, but it is likely it came from drug dealing, scams or robberies.
Dozens of mules would be recruited, usually through word of mouth on housing estates.
Or, if an addict owed a dealer £10,000, for example, the debt could be bought by the money launderer for £6,000 and the individual told they now owe him £16,000.
To clear the debt they can process cash through a bank account, with money being taken off the principal.
The launderer said: “There were preferred banks, as some had no limit on the amount that could be withdrawn in cash. It would be done over the counter rather than at ATMs.
“Most banks had a withdrawal limit of £5,000 where it would flag up, so they would be told to take out £4,800.
“The trick would be to do it quickly – it’d be deposited in one branch and taken out from another within an hour.
“But there were far fewer questions asked in those days. You’d have guys going into bank branches rattling from drugs and handing over a bag of cash or coming out with one. Once there was a bank receipt for the withdrawal, the money was considered clean.”
A cover story would be concocted between mule and herder in case they had to explain where the cash had come from.
Sometimes a fake bill of sale would be drawn up showing that the mule had been paid in cash for an expensive item like a watch.
Smaller amounts could also be laundered by spending cash in shops.
A crew would be handed a wad of £20s and told to spend each one separately on cheap items like a £1 bag of sweets. The change would be considered clean.
He added: “They’d open accounts at different banks but Santander was the bank of choice. They didn’t usually get any grief there with opening accounts and getting the cash in and out.”
Santander now takes a tough stance on tackling money mules.
Susan Allen, the head of retail business banking at Santander UK, told the Treasury select committee in February that the bank closes 24,000 accounts a year on suspicion of fraud. About 11,000 of those are suspected money mule cases.
She said: “People don’t understand what it means. This is facilitating money laundering, economic crime, serious terrorism – we have to do a lot more on education.”
Social media sites are a prime hunting ground for fraudsters looking to recruit money mules.
Criminals place fake job adverts on sites such as Facebook, Instagram and Snapchat offering opportunities to make quick cash.
The posts are often accompanied by hastags such as #instantcash or #moneyflip and photographs showing glamorous young people enjoying the trappings of wealth.
Last year Santander carried out an experiment which showed a third of Brits would apply for a job which actually involved being a money mule.
They created an advert for a fake firm called Money Spark as a “Financial Transaction Control Analyst”.
Details of the role included “receiving and processing of incoming cash funds” and “transferring of funds to accounts indicated by our managers”.
Only 15% of the 2,000 people surveyed realised the true role was as a money mule – and even after being told the truth 7% of people would still have applied.
Chris Ainsley, head of fraud strategy at Santander UK, said: “Criminals often target vulnerable people, such as those desperate for a job, and our research illustrates how easily some people can be tricked into falling victim.”
Katy Worobec, managing director of economic crime at UK Finance, added: “If an offer of easy money sounds too good to be true, it probably is.”
A jobless man has described how he was sucked into becoming a money mule to get extra cash to feed his gambling habit.
The man, in his 30s, ran up debts through betting on horses and football.
He considered applying for jobs advertised online as opportunities to work from home but feared it might affect his benefits.
But he saw nothing wrong in accepting an offer from a friend of a friend to receive occasional deposits via his bank or online gambling accounts.
He said: “I was probably naive as I regarded it as just a sub at first.
“I’d be spending money on betting and leaving myself short to buy food.
“I was pretty desperate.
“I’d get a transfer into my account and be told to transfer it straight back out again, keeping a few quid for myself.
“At first I didn’t really think there was anything wrong in it but it was different amounts, different accounts.
“It didn’t stack up. It’s the old saying, isn’t it, of things being too good to be true?
“I didn’t do it many times. I’m lucky I wasn’t caught. The banks are probably a lot sharper now.”
The man, from Glasgow, sought help for his gambling problem, and added: “It’s not worth the risk.”