What a Real-Life Money Mule Teaches Us of Financial Crime Typologies

We speak to the victims on the other end of financial crime, to lift the lid on the red flags behind trafficking. We unpack how these signs go undetected and how financial institutions and banks can do more to uncover money laundering patterns.

The red flags

In 2009 Tamas Miko, a 24-year-old Hungarian who spoke no English, walked into the branch office of a bank in Hamilton, Canada, with two female companions to open an account and apply for a bank card. His successful applications raised no red flags. Unwittingly the bank staff had enabled a human trafficking gang to launder money using Tamas as a money mule. The two women accompanying Tamas, to help “translate,” were in fact the daughter and wife of the crime boss whose gang had duped the young man to fly to Canada with promises of well-paid work. Confiscating his passport and other vital documents, the gang coerced him into working on construction sites without pay and to live in appalling conditions. The police broke up and successfully prosecuted gang members in 2012 with Tamas’s testimony.

The real lives affected

We were fortunate that Tamas and fellow trafficking survivors Elizabeth Quiroz and Timea Nagy joined us via video link at a luncheon we hosted at the recent Association of Certified Anti-Money Laundering Specialists’ (ACAMS) conference in Las Vegas. They provided us with a harrowing reminder of the misery of the victims whose suffering lies behind the estimated $2 trillion laundered each year. While there are an estimated 40.5 million victims of modern slavery and trafficking around the world, there are many, many more victims of criminal and terrorist activity.

Watch the ACAMS Las Vegas Lunch and hear from the survivors themselves

Tamas’s desperate story highlights one way that criminals launder money and why banks need rigorous Know Your Customer (KYC) checks to alert them to potential cases. He established the link between the victim and the money that, sadly, is too frequently missing for financial institutions to drive their anti-money laundering (AML) and Combatting the Financing of Terrorism (CFT) processes. When bank staff approach KYC, screening and monitoring they must not lose sight of the scale of the money-laundering problem and how they are contributing to tackling the scourge of crime. Currently, about 90% of money-laundering transactions go undetected.

Elizabeth told our guests how as a drug dealer she would make multiple deposits daily or cash cheques for $3,000 at a time for her trafficker without any problems. Her face, ravaged by the effects of heavy drug use, her convulsions and evident distress did not raise the necessary alerts that she was a money mule. In this digital age, criminals have grown more sophisticated in how they approach legitimising their ill-gotten gains. The digitisation and globalisation of financial services have enabled criminals to exploit gaps, bank deficiencies and varying standards of compliance across jurisdictions, heightening the complexity and challenges of anti-money laundering (AML) efforts facing financial institutions. Because of their unregulated nature and the ability to conduct peer-to-peer transactions, cryptocurrencies represent a massive growth area in layering, a technique used by criminals to launder money and transfer it across the world, for example.

Tightening compliance requirements

Last year’s outbreak of the COVID-19 pandemic accelerated this trend, while 2020 also saw the EU and the US lead jurisdictions in tightening AML and CFT compliance requirements for financial institutions. In June 2020, Dr. Marcus Pleyer, the incoming President of the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, launched a new initiative to monitor risks and explore opportunities to improve understanding in the international community of financial flows and cross-border linkages between terror groups and individuals, their funding, donor structures and how they like to operate.

 So, what can financial institutions do to prevent this?

If this initiative is to be successful, it needs to be a collective effort through centralised intelligence-gathering. Financial institutions can no longer operate in isolation and continue a discrete dialogue with their regulatory supervisor, doing just enough to keep pace with their growing compliance obligations. To achieve this necessary step change, however, AML investigators need to keep abreast of the latest techniques criminals and terrorists employ to launder money. The Anti-Financial Crime (AFC) Ecosystem is one of a kind initiative, that is community-driven and powers financial crime prevention. It removes the information vacuum created by siloed operations.

What is the AFC Ecosystem?

Fighting financial crime needs to be a collective effort through centralised intelligence-gathering. The Anti-Financial Crime (AFC) Ecosystem includes a network of experts and provides a platform for the experts to create a knowledge base to share financial crime scenarios. This collective intelligence is the ability of a large group of AFC experts to pool their knowledge, data, and skills in order to tackle complex problems related to financial crime and pursue innovative ideas.

Read More: AML Alert Management: How AI Can Augment Your Compliance Efficiency 

The AFC ecosystem removes the information vacuum created by siloed operations. The network of experts includes risk advisers, legal firms, AFC specialists, consultancies, and financial institutions from across the globe.

Working with those affected firsthand, to develop our ecosystem

The AFC Ecosystem is now open to the broader public. It is a humble initiative to unite people to fight financial crime. Owing to the contribution of experts, the knowledge base has grown considerably.

Join the change