Money Mules in APAC: Threats and Possible Solutions (2024)

According to Sumsub’s most recent Identity Fraud Report, money muling networks are among the top-five global fraud trends. They’re particularly on the rise in APAC, in part, due to a lack of standardized detection techniques and the proliferation of peer-to-peer online payment platforms in the region.

In Singapore alone, more than 4,700 people were arrested or investigated for money muling and other scams in the first half of 2023, according to Singapore Police data. Meanwhile, the central bank of Thailand has recently frozen as many as 200,000 mule accounts as part of the government’s crackdown on financial fraud.

Money muling poses significant risks to online businesses because it involves the illegal transfer of funds often associated with criminal activities, potentially leading to severe legal and reputational repercussions for the entities involved. Moreover, it can be extremely difficult to detect mules because they often have ‘clean’ accounts with no criminal or fraudulent history. In this article, we’ll get into how to detect these fraudsters no matter how well they conceal themselves.

What is money muling?

Money muling is a form of money laundering where criminals recruit individuals to move illicit funds. These individuals, known as ‘money mules’, typically have clean banking histories and no criminal records, making it easier for them to transfer criminal money undetected.

Money mules are often recruited through online job offers, dating sites, or darknet forums. Recruiters entice them with promises of easy money or by deceiving them into jobs that seem legitimate.

The following sectors are most often targeted by money muling:

• Banks, credit unions, and other financial entities are prime targets due to their role in processing and transferring funds, making them attractive for laundering illicit money.
• E-commerce sites process high transaction volumes, which may allow fraudulent activities to go unnoticed. Money mules often use stolen credit cards to make purchases.
• Companies that provide cross-border fund transfers are particularly vulnerable to money mules transferring illicit funds.
• Travel agencies are often targeted by money mules for booking fraudulent trips
• Crypto exchanges offer anonymity, making it easier for money mules to transfer funds without detection.
• Job recruitment platforms are used to entice money mules in the first place
• Romance scams on dating apps can be used to manipulate people into making illegal transactions.

These businesses must implement strong anti-money laundering measures to detect money muling activities.

Check out this article to learn more about money mules and the techniques they use.

Who can be a money mule?

• People experiencing economic hardship. These include unemployed individuals, students, and migrants.
• Young people. A study by the Singapore Police Force involving 113 money mules found that about 45% were 25 or younger. In Malaysia, a survey revealed that one in four students shared their bank account, payment card details, and personal identification numbers with their friends. Consequently, mule account cases are increasingly affecting students in schools, colleges, and universities.
• Elderly people. More people in their 60s are also often being recruited to allow their bank accounts to be used in scams and money laundering.

There are also professional money mules. Professional money mules often use stolen accounts and credit cards to facilitate their activities. This allows them to transfer illicit funds while minimizing their own risk of detection.

Why is money muling proliferating in Asia Pacific?

Several key factors make APAC a prime target for money mules:

• Rapid digitalization: The APAC mobile market is expected to reach 2.1bn users by 2030, which will be worth $1tn. Increased internet and smartphone use create more opportunities for online recruitment of money mules.
• Economic disparities: Economic challenges make individuals more susceptible to ‘get-money-quick’ money schemes.
• Growth of e-commerce: According to Mordor Intelligence, the APAC e-commerce market size is estimated at USD 4.20 trillion in 2024 and is expected to reach $6.76 trillion by 2029, growing at a compound annual growth rate (CAGR) of 10% during the forecast period (2024–2029). More online transactions increase opportunities for using stolen credit card information.
• High volume of remittances: According to the World Bank, remittance flows to the Philippines, the second-largest recipient in APAC after China, increased by 4 percent to $38 billion in 2022, up from $36.7 billion in 2021. Vietnam saw remittance flows grow by 5.2 percent in 2022, totaling $13 billion, compared to a 19 percent increase the previous year. In Indonesia, remittances grew by nearly 6 percent, reaching $10 billion in 2022. Meanwhile, Cambodia received $2.6 billion in remittances. Large expatriate population sending money home creates exploitable transfer channels.
• Diverse financial ecosystems: Varied financial services provide multiple entry points for criminals.
• Regulatory gaps: Some countries in the region have less stringent anti-money laundering regulations or weaker enforcement mechanisms, making it easier for money laundering activities to go undetected.
• Increasing cryptocurrency adoption: Anonymity of cryptocurrencies offers new avenues for money laundering.
• Lack of awareness: Limited public knowledge about money mule schemes and their legal consequences.

Money muling red flags

Here are the red flags indicating a potential money mule:

• The customer is unemployed, retired, or a student.
• The customer has recently started receiving funds from a strange origin that they can’t explain.
• The nature of the customer’s money transfers has changed.
• The customer receives large deposits in quick succession from different locations from third parties.
• The customer’s incoming or outgoing payments come from high-risk countries.
• The customer receives deposits and soon after withdraws them.
• The customer deposits cash via ATMs across multiple accounts using a single card or mobile number.

The presence of a single red flag may not indicate criminal activity, but is a reason to investigate. Businesses should also remember to continuously monitor customer activity because, according to Sumsub’s internal research, 70% of fraud happens after the onboarding stage.

Penalties for money muling in APAC

Participating in money muling is a criminal offense in most APAC countries and can carry severe legal consequences.

However, in most APAC countries, there is no separate offense for “money muling”; instead, individuals are charged for offenses related to money laundering. The penalties for money laundering include monetary fines and imprisonment.

In Singapore, however, the government is proposing an amendment to existing laws to impose severe penalties for money muling activities. The offense is referred to as ‘rash money laundering’ and will carry a maximum fine of up to S$250,000, five years imprisonment, or both.

Just recently in Singapore, Dickson Jong Chee Siang, 29, was sentenced to nine months in jail for his role in opening bank accounts for scammers and enlisting someone to funnel the stolen money of a retiree who lost her life savings to a Chinese impersonation scam.

How to combat money mules

Businesses should implement smart technologies to protect themselves from money mules, fraud, money laundering, and the financial and reputational losses that follow. This includes anti-fraud solutions with advanced transaction monitoring, anomaly detection algorithms, and behavior analysis to identify patterns indicative of money mule activities. Here’s what else should be done:

• Customer Due Diligence (CDD). Detecting mules during onboarding is crucial, as sometimes they use stolen identities, accounts or credit cards to open accounts. Businesses should conduct thorough CDD procedures, which means verifying customer documents, assigning behavioral risk scores, searching blocklists, performing adverse media screening, and more.
• Ongoing monitoring of all user activity, including login details, geolocation, behavior, and IP location, is necessary to detect subtle changes.
• Transaction monitoring to identify unusual transactions in real-time by analyzing the source and destination of funds and potential links to money laundering.
• Fraud network detection. Sumsub’s AI-powered Fraud Network Detection solution can uncover suspicious activity patterns, identifying fraud networks, including money mules, before onboarding. Click here to learn more about online fraud networks and why they are dangerous today.

If a money mule is detected, businesses must report them to law enforcement through the appropriate regulatory regime. In Singapore, the Monetary Authority of Singapore (MAS) has established a platform called COSMIC (Collaborative Sharing of Money Laundering/Terrorism Financing Information & Cases), which was launched on April 1, 2024. This enables certain institutions to share customer information with another only if the customer’s profile or behaviour displays certain objectively-defined indicators of suspicion, or “red flags”, including money laundering through a network of ‘mule accounts’ to obscure the flow of funds.

Disclaimer: The content provided in this article is for general informational purposes only. It does not constitute legal advice or financial guidance. While we strive for accuracy and reliability, we recommend that you consult with a qualified legal or financial professional to address your specific situation. We disclaim any liability arising from actions taken based on the content published herein.