Financial Crime & ‘Money Muling’ – How To Avoid Becoming A Target

“Ignorantia legis neminem excusat”-  A classic Latin Legal principle which means “ignorance of law excuses no one”

Fraud is fraud – So we’re taught.

Lately i’ve have been reading a series of articles and research publications on matters relating to the ever rising cases of financial crime. To be honest, these days it’s hard to look away and simply pretend nothing is wrong. Everything about financial crime is wrong. And it is a global concern. It’s not only wrecking and damaging economies, but also has a direct and harmful corrosive effect on people’s lives.

On this blog post, i intend to focus on a particular issue – Money Laundering. You’ve definitely come across a variety of personal stories, news articles, publications, podcasts, or so, where one or more controversial areas of money laundering are adressed. Money laundering and the environments of illicit financial flows are both prompting a great deal of discussions internationally.

So, what is Money Laundering? The International Compliance Association (ICA) describes Money Laundering as a “process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source.” (Read more)

And, how are ‘Money mules’ and ‘Money Laundering’ connected?- We’ll get to that in a few seconds.

First of all, there are a number ways this kind of financial crime can occur. The most common and obvious types of money laundering activities include Tax evasion and false accounting practices. How does that happen? The simple answer- The process of money laundering is said to be quite complex. (Read more) 

According to an Europol article –MONEY MULING -Public awareness and prevention -“More than 90% of money mule transactions are linked to cybercrime. The illegally obtained money often comes from phishing, malware attacks, online auction fraud, e-commerce fraud, business e-mail compromise (bec) and CEO fraud, romance scams and holiday fraud (booking fraud) and many others.” (Read on)

The United States Computer Emergency Readiness Team (US-CERT), defines “Money Mules” as – “people who are used to transport and launder stolen money or some kind of merchandise.” In addition, criminals may even recruit ‘willing participants’ who by the way, may not even have the slightest hint that they are being used to commit fraud.

In fact, with today’s economic conditions, becoming a victim of money mule scams can be quite easy. Consider a common scenario you’ve probably seen like the “Work from home opportunities.” I can’t tell you enough how many times i’ve seen people in desperate situations looking for these kinds of opportunities. There is absolutely nothing wrong with the idea of earning money from the comfort of your own home as long as it is legitimate.

But if the ‘deal is too good’ and you probably ‘smell a rat’ then it’s high time to be on your guard.

To get some perspective on the scale of the problem, there’s an article on published  which also explains how the money mules process works. Basically, the fraudsters may approach individuals anywhere. This could be online or even  on the streets where they ask their victims to receive money into their banks accounts and transfer it to another account keeping some of the cash for themselves. – Doing this means that you’re a money mule and you’re involved in money laundering.

Another scenario-What would you do if you were targeted by someone who poses like an Army Captain? Or even a police officer? On an article published on abc, an FBI tells of a story of a fraudster who actually posed as an Army Captain. He informed his victim that he was trying to make arrangements to travel home. Long story short, the victim received  $10,000 in his bank account. He was then instructed to ‘withdraw it in small increments’ and send it to a woman in Texas. (Read on)

Now we see why there’s high importance in being vigilant. As part of being aware, we should be keen to understand what the source of funds are, and the purpose of a retainer.

Here’s a short clip from CIFAS revealing some of the reasons why criminals need Money Mules

Here are more links to help you learn more about ‘money muling’

The Dangers Of Over-Reliance On High-Level Metrics To Manage A Company

“It is not enough to be busy. So are the ants. The question is: What are we busy about?” Henry David Thoreau – Letters to Harrison Blake (1848-1861) 


– The Mechanics Of Identifying ‘Pockets of Value Creation’

The title of this post was borrowed from an article i came across published on McKinsey website  “Unearthing the sources of value hiding in your corporate portfolio.”

The article provides interesting facts about the dangers of being too focused on specific financial metrics which could hinder company executives from spotting potential sources of Value creation. As an example, the article highlights a common case scenario where a large number of top managers pay much attention to  averages of top-line growth,” economic profit,” and “return on invested capital (ROIC)” and focus less on other important indicators  of growth and returns.  The article points out that even though a company may be experiencing a top-line growth, it is also important to also take a closer look at the market share and how well the company is competing. To achieve that, the authors state:

“…successful intervention requires executives to understand the more important leading indicators of growth and returns that are often overlooked. These include the growth of the relevant market, in size as well as in market share; changes in pricing and gross margin; and R&D and sales, general, and administrative expenses…” (Read on- Source: McKinsey)

–  Show Me The Money- The Money Is In The Strategy

A separate McKinsey quartely article (‘How to put your money where your strategy is’), highlights some common mistakes companies make when it comes to allocating resources. So what’s the deal? Is there a right or wrong when it comes to company resource allocations? There is no straight answer. It’s all abouth the right strategy. From the article, keeping an eye on how resources are allocated could help a company it’s performance. In the article, an interesting discussion about why companies should try and avoid allocating their resources to the same business units on a prolonged level of years,  is best described using the following scenario:

“..picture two global companies, each operating a range of different businesses. Company A allocates capital, talent, and research dollars consistently every year, making small changes but always following the same broad investment pattern. Company B continually evaluates the performance of business units, acquires and divests assets, and adjusts resource allocations based on each division’s relative market opportunities. Over time, which company will be worth more?…”  (Read on- Source: McKinsey)

–  The Relationship Between Resource Allocation Decisions And Higher Returns For Shareholders

I came across a variety of published studies and articles highlighting the importance of  companies’ senior executives consistently reevaluating how, why, how much and where their companies’ resources are allocated. Regular reevaluation of resource allocations not only helps  create more value to a company but also helps a company to strategically deliver higher returns to shareholders. Below are 3 + 1  further readings suggested to give you valuable insight about the importance of resource allocation-